Analyze the fraud that occurred in the case Crisis at the Mill: Weaving an Indian Turnaround. Consider the theoretical models of fraudulent behavior, evaluate internal controls, assess fraud risk factors, and apply prevention and detection techniques. Analyze the overall responsibilities of the auditors to organizational stakeholders while considering applicable auditing standards. Discuss the participants, evaluate the companys internal controls and weaknesses, discuss any red flags, explain how the fraud was discovered, and examine the evidence gathered to support the proof of fraud. Examine the companys financial statements and nonfinancial information and discuss the outcome of the case.
Critical Elements must be addressed:
Analysis of Fraud That Occurred
A. Who were the main participants? Why did the fraud occur? Be sure to discuss this in terms of theoretical models of fraudulent behavior.
B. Evaluate the companys internal controls for their effectiveness in preventing fraud. Where were the weaknesses?
C. What were the red flags that signaled fraud was occurring? How did you discern whether or not these occurrences were legitimate transactions?
D. Through an examination of the case study, explain how the fraud was discovered. How could the methods used in this discovery inform future
investigations?
E. Discuss evidence that was gathered to support proof of the fraud and to comply with the auditing standard for gathering sufficient competent
evidence.
F. Examine the companys financial statements. Perform ratio analysis and explain which results may indicate fraud.
G. Examine the companys nonfinancial information, such as the management discussion and analysis (MD&A) section of the annual report.
Identify the possible presence of fraud and provide rationale for your findings.
H. What was the outcome of the fraud case and what happened to the key players? How could this inform stakeholders in preventing future
instances of fraud?
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