Fraud Examination and Forensic Accounting at Clueless Corporation

This report presents a comprehensive fraud control program (FCP) designed for Clueless Corporation, addressing past incidents of fraud and aiming to prevent future occurrences. The report outlines the essential components of an effective FCP, aligning with the Association of Certified Fraud Examiners (ACFE) guidelines. It details fraud risk oversight, ownership, and assessment, along with process-level and environmental-level anti-fraud controls. The report emphasizes the importance of proactive fraud detection, employee selection processes, and resource utilization. Furthermore, it explores how the FCP integrates within the organization's structure, ensuring transparency, accountability, and fairness among all stakeholders. The FCP is designed to be a multi-faceted solution to mitigate fraud risks and protect the organization's financial status and reputation, while emphasizing the need for thorough background checks, and a skilled internal control team. The report highlights the governance strategies the board can use to ensure the business operates within acceptable limits and the utilization of resources such as financial and accounting departments to make the FCP a success.

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FRAUD EXAMINATION AND FORENSIC ACCOUNTING
Introduction
In the contemporary world, cases of fraud in organizations have been on the rise,
increasing the demand for fraud examination and forensic accounting. Forensic accounting plays
a crucial role in fraud examination as it helps in providing reliable financial evidence and
analysis during a fraud examination. Fraud has devastating effects on the economy and the
business organization involved in the organization (Adetiloye et al., 172). One way to prevent
and contain the impact of fraud in an organization is to formulate and implement a fraud control
program (FCP). Clueless Corporation is has expressed fraud incidents with its former contract
manager being prosecuted for taking kickbacks and a salesperson persecuted for bribing an Air
Force general to acquire a contract for Clueless Corporation. Investigations have been done but
did not indict any individuals though they acknowledge fraud in the organization. As the new
Director of Internal Control and Oversight for Clueless Corporation, a comprehensive Fraud
Control Program would prevent and contain fraud in the organization. The FCP should be
formulated based on the size of the organization, the operating environment, and the complexity
of the industry. The report will discuss the structure of the FCP program, the components that
will deter fraud, how the FCP will fit in Clueless Organization structure as well as the resources
to be utilized to make the FCP a success. The Association of Certified Fraud Examiners (ACFE)

aims at reducing fraud in an organization all over the world through detection and preventing of
fraud.
Components of the FCP
The fraud control program for Clueless Corporations outlines the essential elements that
will help in the detection, identification, and prevention of fraud. The FCP consists of
components that will detect and prevent fraud in the organization to promote efficient and
effective operation. The FCP will serve as a framework for the Compliance, Oversight, and
Professional Standards (COPS) department in the organization (Othman, Zainan and Amin,
2015). The plan would provide elaborate oversight mechanisms and strategies for all the
activities within and outside the business premises.
According to ACFE, a good fraud control program should have seven essential elements,
which are considered as the ACFE fraud prevention check-up. The components of the program
include Fraud Risk Oversight, Fraud Risk Ownership, Fraud Risk Assessment, Fraud Risk
Tolerance and Risk Management Policy, Process-Level Anti-Fraud Controls and Reengineering,
Environmental-Level Anti-Fraud Controls and Proactive Fraud Detection
Fraud Prevention Components
Fraud oversight is under the mandate of the board of governor of Clueless Corporation
through the assistance of the audit committee in the organization. The program is going to
provide the board of governors with the strategies that will promote fraud oversight in the
organization. Fraud risk ownership is an essential element that will prevent fraud in the
organization. The program should ensure that the "ownership" of fraud risk is assigned to a
senior manager (Dawson, 2015). This is important as it will ensure that ownership of risks is
spread down the organization. The senior managers give to the unit-level managers'

responsibilities and the same level of risk ownership. This will ensure ownership of fraud risks
will systematically flow through the organization ensuring every employee is responsible for
their assigned duties. Also, Fraud Risk Assessment will contribute significantly to fraud
prevention in the organization. Fraud risk assessment involves identifying the potential risks in
the organization and their likely manifestation hood. Having an understanding of the possible
fraud in Clueless Corporation will help in establishing measures to prevent fraud.
Process-Level Anti-Fraud Controls and Reengineering will help in the prevention of
fraud in the organization through the layering controls over the existing process or re-working
processes. The only current anti-fraud program in Clueless Corporation is the annual financial
audit process. The program will ensure that the annual audit process is made more elaborate, and
all the discrepancies in the ledgers and the recommendations of the financial auditor must be
addressed. Additionally, the program suggests that the organization should consult external
auditors who will be undertaking periodical audits in the organization within a year. Any
contradiction in the internal and external review can be used as an indicator of possible fraud in
the organization, warranting a fraud investigation by the responsible committee. Most of the
fraud usually involves senior management members with the capability to override process-level
control (Henry, 17). For instance, a former contract manager at Clueless was prosecuted for
receiving kickbacks. Therefore, environmental-level anti-fraud controls will come handy in the
organization. This can be achieved through" soft" controls, including encouraging employees to
report any suspected fraud, deterring wrongdoing, and promoting ethical behavior. The program
will, therefore, ensure that fraud is controlled across all levels within the Clueless Corporation
organizational structure.

Fraud Detection and Containment Components
Fraud detection is essential for the smooth operation of a business organization. The FCP
will incorporate the Proactive Fraud Detection component to ensure that there is a continuous
process to detect, investigate, and resolve serious prospective fraud. This involves the testing or
auditing of "hooks" designed to potential flag risks identified during a risk assessment. The
proactive fraud detection will ensure that the discrepancies in the internal and external audit are
engaged in well documented forensic investigations (Iyer, Nigel, and Martin, 2016). This
measure will help Clueless Corporation to detect fraud in the organization, and through the
forensic investigation, the involved individuals will be held responsible for their actions.
Therefore, ensuring that fraud within Clueless Corporation is controlled.
Although fraud prevention is the main focus of the FCP, some frauds may override the
prevention mechanisms outlined by the FCP. The Fraud Tolerance and Risk Management Policy
will ensure that certain fraud risks o Clueless Corporation are tolerated and accepted as part of
the operational cost (Hess, Megan, and James, 15). Some fraud risks cannot be tolerated since
they may have a catastrophic effect on the financial status and the reputation of the organization.
According to ACFE, a good fraud control program should identify and categorize risk but also
offer an acceptable level of acceptance. The tolerance level allowed in the business should have
negligible effects on the brand image and financial status. The components discussed above,
among many others, make the FCP a better solution to the fraud incidents involved witnessed in
Clueless Corporation.
Employee Selection Process
Fraud in an organization is highly dependent on the type of employees working in the
organization. Having a comprehensive employee selection process will ensure that the

organization does not only high the skilled and experienced people for the task but also ensure
the employees have strong personal principles that prevent them from engaging in any form of
fraud. There are several strategies provided by the FCP to ensure that the employees hired by
Clueless Corporation are well qualified in terms of technical knowledge, experience, and honesty
levels. The employee selection provided by the FCP will apply for all those who want to become
employees of Clueless Corporation, including the team members of the Internal Control and
Oversight department.
As the director of the new director of the Internal Control and Oversight department, I
have to constitute a robust internal control and oversight team. The team will ensure that the
operations within Clueless Corporation are always under scrutiny to prevent and contain any
fraud that might occur. The first step to ensure that the internal control and oversight department
has the right employees is to conduct elaborate background checks in all the employees hired. In
the contemporary world, information about individuals is consolidated in databases that can be
assessed to verify the credibility of the individual. The police agencies and the justice department
keep records of all the individuals indicted with crimes. The organization can use the databases
to perform a background check and prove that the hired individual does not have any past fraud
records. The background check for the employees will include verification of previous
employment, checking for a legal criminal conviction, drug screening, education, and
certification verification, as well as checking the referees attached.
The internal control and oversight department is to be comprised of experienced technical
and non-technical employees of Clueless Corporation. They must include experienced
accountants, lawyers, engineers who have outstanding credentials. The accountants should be
well conversant with fraud detection and investigation based on the auditing process involved.

The lawyers in the department should be well conversant with forensic accounting to help in
finding and documenting strong evidence that can be used in the court of law. The lawyers will
bring the legal aspect required in the fraud investigation. This ensures that any fraud detected in
the organization can be enforced through the court of law, and the involved parties should be
held responsible for their actions. The engineers will bring technical knowledge in the
department, which involves the use of information technology to detect and prevent fraud in the
organization (McMahon, Richard, et al., 2016). For instance, the engineers may recommend the
information systems or production systems that will ensure the fraud loopholes are entirely
sealed in the day-to-day operation of Clueless Corporation. Apart from their specialized
expertise, the experts in the internal control and oversight department should have completed the
basic fraud examination courses and are a credited member of the Association of Certified Fraud
Examiners (ACFE) (Gottschalk, 2016). Such an organized team with experts in various fields
will ensure that the control and oversight department monitors and prevents potential fraud in the
organization.
Role of Fraud Control Program in the Organization Structure
The fraud Control Program falls within the governance structure of Clueless
Corporation. The governance structure is part of the organizational structure that involves
determining the way the business organization is directed and governed. The board of governors
of Clueless Corporation is the sole body mandated with overseeing the corporation. There are
several governance strategies that the board of governors can utilize to ensure that the business is
operating within the acceptable limits. The fraud control program is one of the strategies that the
board can use to ensure that the fraud incidents witnessed in Clueless Corporation will not
happen in the future.

The fraud control program will help the governance structure of the organizational
structure to ensure transparency, accountability, and fairness among all the stakeholders involved
with Clueless Corporation. The stakeholders in Clueless Corporation include the customers,
financiers, employees, management, government, as well as the community. Fraud in the
organization will destroy the Clueless brand image on the stakeholders, thus reducing the
opportunities for future contracts (Dimitrijevic et al., 35). The program will ensure that the
employees within the organization are treated fairly, and every individual held responsible for
their actions, including those involved in fraud activities. The program will be devolved through
all departments since it ensures all sectors of the business organization are monitored through the
FCP. It will include the formulation of the roles and responsibilities of all the positions created
within the organization structure of the organization. The president of the organization relies on
the board to ensure that they revive the reputation of Clueless Corporation by preventing fraud
incidents now and in the future.
Resource Utilization in the FCP
Just like any project carried out in an organization, the formulation and implementation
of the fraud control program will use resources in the organization. The wording of the FCP will
require the organization to consult firms experienced in fraud examination. The consultation will
cost the organization a considerable amount of money. However, the cost incurred is worth it,
considering the funds that may be lost through fraud and the destroyed brand image. Also, the
company has to document policies and regulations. The plans, rules, and regulations have to be
printed and displayed in all the facilities spread across six states. This exercise requires the
organization to allocate a considerable amount of money for it to become a success. Apart from
the utilization of financial resources in the organization, the FCP will also require the services of

the accounting department. The accounting department is involved with handling cash in the
organization; thus, it can easily be used to detect any irregularities in the cash flow process. The
annual internal audits carried out by the organization will come handy in the implementation of
the FCP in Clueless Corporation.
Plan of Action for the Implementation of the FCP
As the new director of the internal control and oversight department, we have a clear plan
of action to facilitate the implementation of the fraud control program in Clueless Corporation.
The FCP plan will incorporate assessment mechanisms that can be used to evaluate its impact on
the organization. The program will have both short term and long term evaluation and check-ups
to ensure that the program is implemented successfully. The evaluation may include the fraud
risks prevention checklist and the fraud detection checklist. The management will be required to
have strong change management skills since the program intends to change the situation in the
organization. The fraud detection score sheet will be used to determine fraud identified in the
organization through the implementation of the program, while the fraud prevention score sheet
will determine the fraud prevented by the FCB. The two score sheets, fraud detection and fraud
prevention will validate the efficiency of the program in the prevention of fraud in Clueless
Corporation. The organization should ensure that the employees involved in fraud are subjected
to strict disciplinary actions to serve as an example for other employees with similar intentions.
Also, the organization should offer the employees competitive wages that satisfy their needs.
Once the employees are contented with the compensation they receive, the chances of engaging
in fraud will reduce significantly. These are some of the short term measures that the
organization should facilitate in the implementation of the fraud control program.

For the organization to realize long term results, fraud prevention and detection should be
incorporated within the Clueless Corporation organization culture. The culture will create an
environment that promotes whistle blowing with the various departments, thus preventing fraud.
The organization should ensure that the whistleblowers are well protected and are not
intimidated by those in authority in one way or another (Donelson, Dain, Matthew, and John,
2016). This will encourage employees to report any suspected fraudulent activity within Clueless
Corporation. The investigation process should also be strengthened by allocating adequate
resources, including funds and personnel required for investigating suspected fraud in the
organization. This will ensure proper fraud management in the organization and consequently
improve the efficiency and productivity of the organization.
Conclusion
Fraud incidents have been on the rise in the news involving several business enterprises
all over the world. Fraud leads to loss of revenue for an organization as well as destroying the
brand image, which reduces the opportunity for future engagements. Fraud Control Program is a
framework that provided an organization with the measure that detects and prevents fraud. As
the new Director of Internal Control and Oversight for Clueless Corporation, I acknowledge that
a comprehensive Fraud Control Program would prevent and contain fraud in Clueless
Corporation. The FCP provided mechanisms for the detection and prevention of fraud in the
organization, thus realizing efficient fraud management. The board of governors is encouraged to
embrace the FCP as it will promote the governance of the organization through the internal
control and oversight department.

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