At the beginning of the fraud discovery, a WoolEx Mills’ ex-employee stepped forward and made allegations regarding possible financial irregularities to Sapphire Capital. He claimed that he witnessed firsthand how WoolEx Mills’ senior managers were committing fraud against the company before he was terminated for underperforming. Sapphire Capital took the former employee’s allegations very seriously and discretely requested the assistance of a corporate investigation firm to initiate the investigation. Gathering pertinent data prior to questioning witnesses and suspects gave Sapphire Capital a clearer picture of what was going on. The investigation proved validity to the allegations, so Sapphire Capital contacted Alvarez & Marsal (A&M) to lead the fraud response team. The fraud response team’s objective was to further investigate WoolEx Mills’ financial irregularities through fraud detection and examination…show more content… Companies are more prepared to handle external frauds as they occur more often. When a company discovers internal fraud, the repercussions are serious and important to consider when investigating. For example, the company could lose its reputation or employee morale decreases. Also the allegations need to be treated with discreteness to avoid tipping off suspects who try to destroy evidence. Therefore, the creations of a fraud response plan and an initial action checklist are crucial to discovering internal fraud. The initial action checklist enables discovery to be performed discretely and confidentially. The fraud response plan, which Sapphire Capital initiates with contacting the corporate investigations team and A&M, breaks down how to properly investigate and report fraud. Unfortunately, internal fraud cases require management to be prepared to lose everything (Planning and Conducting a Fraud Examination n.d.) (Clements
