Investigation of Shop Foreman for Fraud in Manufacturing Company

Unit 8 - Sandy's Manufacturing As a fraud examiner, let us explore who Shop Foremen are as per the case. The Shop Foreman oversees evaluating, directing, and performing the repair and servicing of the company's equipment. They control the manufacturing process, are responsible for equipment maintenance, and have the authority to purchase parts. They have to be familiar with the computer software used by the company and the repair procedures to place inventory orders. Their functions are like a manager in manufacturing or repair shops; therefore, they should also manage staff, such as the assistant shop foreman and the inventory manager. As I started my investigation, the main subject, in this case, was Ken, the Shop Foreman who was believed to be the suspect, based on the outlook of the case, that he had committed the fraud. I will investigate as he is the fraud suspect because he is the shop's manager, has total control over the manufacturing process, has the authority to purchase parts and use inventory, and is familiar with the software used to control inventory. As the investigation proceeds, I do not believe that James and Doug committed the fraud because they are Ken's subordinates; therefore, they will need his authorization to take out parts from their inventory system and the warehouse. The auditors noticed an increase in the number of machine parts attributable to these parts having a short life span and breaking down because the Shop Foreman intentionally ordered those short-life parts intending to designate them out from the inventory as defective to sell them directly by the suspect. Sandy's manufacturing sells its waste metal products; its revenue from waste metal products should have increased instead of decreased and decreased because the parts were not defective and, therefore, not sold to a recycler. Instead, the suspect, Ken, sold them on the black market for cash. The case also states that the manufacturing revenue increased and manipulated that information by Ken to cover the revenue decrease from waste-metal products.