| Course | ACC 421 Auditing and Forensic Accounting |
|---|---|
| Module | Module 7 |
| Paper type | undergraduate forensic accounting investigation report |
| Length | About 1,000 words, 6 pages |
| Format | APA 7 student paper |
| School | Southern New Hampshire University |
| Program | BS Accounting |
| Updated | October 2026 |
Free sample paper for ACC 421 Module 7
Report on the Investigation of Payments to a Garment Repair Vendor at a Composite Uniform and Linen Rental Company
[Student Name]
Southern New Hampshire University
ACC 421: Auditing and Forensic Accounting
Project Two
[Instructor Name]
[Date]
The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.
Report on the Investigation of Payments to a Garment Repair Vendor at a Composite Uniform and Linen Rental Company
Engagement and Scope
This report was prepared at the owner's request after the company's external auditors identified unusual payments to a vendor described as a garment repair service. The scope was limited to all payments to that vendor from the date it was added to the vendor master file, 26 months before the engagement, through the date of this report, and to records bearing on whether the vendor provided services. The work was performed under the methods described in standard forensic accounting practice (Kranacher & Riley, 2019). This report presents facts and analysis; it does not express a conclusion about the guilt or intent of any person.
Procedures Performed
The investigation proceeded in four stages so that records were secured before anyone involved was approached. First, payment data for the vendor and all other vendors were extracted from the accounting system and analyzed. Second, public records were searched for the vendor's registration, ownership and address. Third, every invoice, payment approval and bank record related to the vendor was examined, along with maintenance logs and plant work orders. Fourth, the plant manager and two maintenance employees were interviewed about repair services. The payables clerk, who added the vendor and processed its payments, has not yet been interviewed; that interview is recommended as the next step, with counsel present and the documents in hand.
Findings
Finding 1, payment pattern. The company paid the vendor $288,400 in 61 payments. Every payment fell between $4,500 and $4,990, below the $5,000 level at which the controller's approval is required. No other vendor showed a comparable concentration below the threshold (payment data analysis).
Finding 2, vendor setup. The vendor was added to the vendor master file by the payables clerk's user ID. The setup record lists no tax identification number, which company policy requires, and the field was later filled with a number that state records associate with a different business (vendor master file audit trail; state records search).
Finding 3, registration and address. The vendor is registered with the state as a limited liability company whose organizer shares a surname and residential address with the payables clerk's spouse, according to county property records. Its business address is a box at a shipping store eight miles from the plant (state business filings; county records).
Finding 4, invoices. The 61 invoices are numbered consecutively from 1001 to 1061 over 26 months, which would mean the vendor had no other customers. They are produced from the same word processing template with identical formatting, and none references a work order, garment count or contact name (document examination).
Finding 5, services. The plant manager and both maintenance employees stated that they had never heard of the vendor and that garment repairs are done in-house by two seamstresses or returned to the uniform manufacturer under warranty. No work order, shipping record or receiving record refers to the vendor (interviews; plant records).
Finding 6, bank account. Payments were made by automated transfer to a single account. The account number matches one listed on a direct deposit change request submitted by the payables clerk 31 months ago and later withdrawn (payroll records).
Quantification of Loss
Table 1. Payments to the Vendor by Fiscal Year
| Fiscal year | Payments | Amount |
|---|---|---|
| Prior year (14 months of activity) | 32 | $149,500 |
| Current year | 29 | 138,900 |
| Total | 61 | $288,400 |
All 61 payments are included in the loss because no evidence indicates that any service was provided. Had any legitimate repairs been identified, their value would have been excluded.
What the Evidence Establishes
The evidence establishes that the company paid $288,400 to a vendor for which no service records exist, that the vendor was set up and paid through the payables clerk's user ID, that its payments were structured below the approval threshold and that its registration and bank account are linked to the clerk's household. These facts are consistent with a fictitious vendor scheme, a common form of billing fraud (Association of Certified Fraud Examiners, 2024). The evidence does not establish who prepared the invoices or received the funds, and it does not exclude an explanation the clerk may offer. Those questions require the interview and, if the owner chooses, a subpoena of the bank account through counsel.
Recommendations
The company should notify its insurer under its employee dishonesty coverage promptly, preserve all records and devices used by the payables clerk and consult counsel about the interview, any suspension and a possible referral to law enforcement. To prevent recurrence, it should separate vendor setup from payment processing, require a second person to verify any new vendor's registration, tax identification number and address, review a monthly report of payments just below approval limits and require plant confirmation of services before repair invoices are paid. Dorminey et al. (2012) note that removing opportunity is the most reliable response a company controls, since pressure and rationalization often cannot be seen.
Effect on the Financial Statements
The findings have consequences for the company's statements as well as its controls. Because the payments were recorded as repair and maintenance expense, net income in each year already reflects the cash that left the company; the scheme did not overstate profit, but it misclassified a theft loss as an operating cost and concealed it. The external auditors will need to decide with management how the current-year portion, $138,900, should be presented and what disclosure the prior-year portion requires. Any insurance recovery can be recorded only when it becomes probable. These questions are for the audit and are noted here so that the owner understands why the auditors will ask for this report.
Limitations
The investigation relied on company records, public records and three interviews. Bank records of the receiving account were not available. The work did not extend to other vendors except for the comparative analysis in Finding 1, and it is possible that other irregularities exist outside its scope. The findings may need to be updated if the interview or the bank records produce new information.
References
Association of Certified Fraud Examiners. (2024). Occupational fraud 2024: A report to the nations. Author.
Dorminey, J., Fleming, A. S., Kranacher, M.-J., & Riley, R. A. (2012). The evolution of fraud theory. Issues in Accounting Education, 27(2), 555-579. https://doi.org/10.2308/iace-50131
Kranacher, M.-J., & Riley, R. A. (2019). Forensic accounting and fraud examination (2nd ed.). Wiley.
What the ACC 421 Module 7 instructions ask for
Project Two in ACC 421 usually asks you to conduct and report a forensic investigation of a suspected fraud described in a case. Expect to define the engagement and its scope, describe the procedures performed, present findings supported by specific evidence, quantify any loss and recommend corrective action. Most versions require a formal report addressed to the client, often with exhibits. Use neutral language: a forensic accountant reports facts and their consistency with a scheme, but does not declare guilt, which is for a court. Distinguish what the evidence establishes from what it suggests, explain how the loss was computed and list limitations. Recommendations should address both recovery and prevention.
How this ACC 421 Module 7 project two example is built
The report follows a structure a court or insurer could use. It describes the engagement by the owner after the audit team's referral, the scope of 26 months of payments and the procedures: vendor master file and payment analysis, public records searches, document examination and interviews with the plant manager and two maintenance staff. Findings show a vendor registered with the state by a relative of the payables clerk, a shipping store mailbox, invoices numbered 1001 to 1061 in order, payments just under the approval threshold and no work orders or garments matching any invoice. The loss is $288,400, split by fiscal year. The report notes the clerk has not yet been interviewed and recommends controls and an insurance claim.
Where the ACC 421 Module 7 rubric puts the points
Rubrics for ACC 421 Project Two typically score the definition of scope, the appropriateness of procedures, the presentation of findings with evidence, the quantification of loss, the professional and neutral tone of the report, and recommendations. Top papers present findings in a logical order, cite the specific document or analysis behind each, compute the loss transparently, distinguish facts from inferences and avoid conclusions about guilt or intent. Graders reward recommendations that address recovery, prevention and next steps such as interviews or referral to law enforcement. Common deductions include accusatory language, findings with no source, loss figures that mix in legitimate payments and omitting limitations of the work performed.
ACC 421 Module 7 help: the mistakes that cost points
Forensic reports most often lose points by sounding like an accusation rather than a report, by presenting conclusions without the evidence that supports each, and by computing a loss that has not been tested against legitimate transactions. Another gap is ignoring the order of steps: the subject is usually interviewed last, after documents are secured. If your case involves skimming, payroll fraud, financial statement manipulation or a corruption scheme, the report keeps this shape and simply carries your evidence. A useful discipline is to write every finding as an observation followed by its source, then let the reader draw the obvious inference. Exhibits, such as the payment schedule and the state filing, should be attached so each finding can be checked against its source.
Get ACC 421 Module 7 written to your instructions
Send the ACC 421 Project Two case, the evidence provided and the rubric. The report will define the scope, describe the procedures, present findings with their evidence, quantify the loss and state conclusions within what the evidence supports. Your first one is free of charge; two days is typical. The paper above is an original model document written by our desk, not a submitted student paper and not an official Southern New Hampshire University document.
More ACC 421 papers and related BS Accounting samples
- ACC 421 Module 1 Discussion: Skepticism and the Auditor's Job
- ACC 421 Module 2 Audit Planning and Materiality Assignment: Materiality and Risk for a Linen Rental Client
- ACC 421 Module 3 Internal Control Testing Assignment: Testing Controls Over Route Cash and Credits
- ACC 421 Module 4 Project One: A Revenue and Receivables Audit Program
- ACC 421 Module 5 Fraud Risk Assessment Assignment: The Fraud Triangle at a Family Company
- ACC 421 Module 6 Discussion: Benford's Law on Vendor Payments
- ACC 421 Module 8 Audit Reporting Assignment: Choosing the Opinion and the Paragraphs
- FIN 320 Module 6 Capital Budgeting Analysis
- OL 320 Module 8 Entrepreneurial Risk Discussion
- ACC 201 Module 1 Users of Financial Statements Discussion
- ACC 202 Module 5 Operating and Cash Budget Assignment
ACC 421 Module 7 questions, answered
Where can I find a free ACC 421 Module 7 Project Two sample?
This page holds a complete ACC 421 Module 7 Project Two forensic report quantifying a fictitious vendor scheme at a linen rental company.
What should a forensic accounting report include?
The engagement and scope, procedures performed, findings with supporting evidence, quantification of any loss, limitations and recommendations, in neutral language.
Does a forensic accountant decide whether someone committed fraud?
No. The forensic accountant reports facts and whether they are consistent with a scheme. Determining guilt or legal fraud is for courts or other decision makers.
Why is the suspect usually interviewed last?
So that documents and records are secured and the facts are known first, which prevents evidence from being destroyed and allows the interviewer to test explanations against facts.
What are signs of a fictitious vendor?
A mailbox or residential address, no tax identification history, sequential invoice numbers, payments just under approval limits, a bank account linked to an employee and no evidence of goods or services received.