There are situations where activities do not get the same le…
There are situations where activities do not get the same level of scrutiny if they seem to be small. From the headlines: Situation 1. The indictment alleges that , using her position would split contract requests from one contract into multiple, smaller contracts, in order to avoid threshold amounts that would trigger a formal, competitive bidding process. To meet the Department of Education requirement that such an informal bid have at least two competing vendor quotes for comparison, would obtain false and inflated quotes, by herself and from the other conspirators, designed to make the intended conspirator’s business the lower bid, and to guarantee the award of the contract. Situation 2. also knew that its outside auditors only questioned additions to fixed asset accounts at any particular facility if the additions exceeded a certain dollar threshold. Thus, when artificially increasing at a particular facility, HRC was careful not to exceed the threshold. In Situation 1, a manager would split contracts into smaller units where the bids did not need the same level of scrutiny. This allowed the manager to funnel the contracts to associates. In Situation 2, a manager kept the artificial transactions below a dollar limit, because the auditors would not look at small transactions. Required: a. Which category of objective(s) is involved with Situation 1, Operations, Reporting, or Compliance? b. Which category of objective(s) is involved with Situation 2, Operations, Reporting, or Compliance? c. What can be done to prevent or detect frauds that are individually small, but add up? I’m asking you for a bit of speculation on what organizations can do. Incidentally, in both cases, the fraud came to light, but only after they had some effect.