Overview
Milestone Two provides the basis for planning the testing of your hypothesis for the fraud scheme. In forming the hypothesis, you will determine the type of fraud that could occur, the controls present or absent in the company, and how the fraud could occur.
Prompt
For this milestone, you will submit the Development of Hypothesis section (Section II) of your final project. Be sure to address all of the critical elements as outlined below.
Specifically, the following critical elements must be addressed:
- Development of Hypothesis
- Using an analysis of the fraud triangle and potential red flags, what types of fraud could be occurring in the company?
- What preventive or detective controls are present or absent that would safeguard against fraud? Support your response.
- What is your fraud hypothesis? Why do you feel fraud is occurring at this company?
- Based on your hypothesis, what are appropriate ways to collect evidence without violating professional standards such as the American Institute of CPAs (AICPA) code of conduct?
What to Submit
Your paper must be submitted as a 2- to 3-page Microsoft Word document with double spacing, 12-point Times New Roman font, one-inch margins, and at least two sources cited in APA format.
Milestone Two Rubric
| Criteria | Proficient (100%) | Needs Improvement (80%) | Not Evident (0%) | Value |
|---|---|---|---|---|
| Development of Hypothesis: Types of Fraud | Identifies what types of fraud could be occurring in the company, utilizing an analysis of the fraud triangle and potential red flags | Identifies what types of fraud could be occurring in the company, utilizing an analysis of the fraud triangle and potential red flags, but there are inaccuracies present | Does not identify what types of fraud could be occurring in the company | 23 |
| Development of Hypothesis: Safeguard | Determines preventive or detective controls that are present or absent that would safeguard against fraud and supports response | Determines preventive or detective controls but lacks an application to controls that are present or absent in this fraud, or does not support response | Does not determine the preventive or detective controls that would safeguard the company against fraud | 23 |
| Development of Hypothesis: Fraud Hypothesis | Discusses fraud hypothesis and why it is occurring at this company | Discusses fraud hypothesis and why it is occurring at this company, but discussion lacks detail or hypothesis is illogical | Does not discuss fraud hypothesis | 22 |
| Testing of Hypothesis: Without Violating Professional Standards | Determines appropriate ways to collect evidence without violating professional standards based on hypothesis | Determines appropriate ways to collect evidence without violating professional standards, but does not base determination on hypothesis | Does not determine appropriate ways to collect evidence without violating professional standards | 22 |
| Articulation of Response | Submission has no major errors related to citations, grammar, spelling, syntax, or organization | Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas | Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas | 10 |
| Total: | 100% |