Question

Bob Taylor, CFE, is writing a report on his findings from an investigation into an alleged inventory larceny scheme. During his investigation, he was unable to accurately quantify the amount of the loss to the victim company, but he assumes that the loss falls between $100,000 and $200,000. In the report, Bob should report the amount of the loss as $200,000 so that the company can recoup as much money as possible from the perpetrator.

a. True
b. False

Answer 1

Bob Taylor, CFE, should not report the loss as $200,000 in the larceny scheme investigation. He should report it within the estimated range of $100,000 to $200,000 and document any uncertainties.

Step-by-step explanation:

The student asks whether Bob Taylor, CFE, should report the amount of the loss in an investigation of an alleged inventory larceny scheme as $200,000 to maximize the recoupment from the perpetrator, even though the exact amount cannot be determined and is estimated to be between $100,000 and $200,000. The answer to this question is false. It is unethical and professionally incorrect to report the higher amount without accurate substantiation. Bob should report the loss within the estimated range and document the uncertainties and assumptions underlying his estimates.