(OR) BIL Limited is a company manufacturing premium shampoos since last decade. The company functions through various salesmen appointed across the…

Procedure to be followed to Investigate Commission Schemes Fraud: (1) Before proceeding to investigate frauds of the type aforementioned, the investigating accountant should ascertain the exact duties of the person concerned who is suspected to have committed a fraud, his relationship to the general routine of the office and the circumstances in which any known instances of defalcation have come to light. (2) Such an enquiry would give a clue to promising avenues of investigation. Greater the authority of the individual suspected of a fraud, wider would be the field which would have to be covered by the investigation. (3) At times, an accountant is called upon to investigate a suspected fraud, the details or the nature whereof is not known. In such a case, for localising the source of the fraud, the investigating accountant will have to study the financial and accounting structure of the organisation. (4) As a first step, he should examine the line of responsibility between the various members of the staff. He should have a look at the system of internal control in operation for spotting out the weaknesses, if any, that may exist in it. (5) Relying on the above study, he should direct his enquiry towards those aspects of the business where there has been excessive control in the hands of single person/employee, without any supervision by any other person/employee or, any other inherent weakness that may be in existence in the system.