BACKGROUND OF THE CASE/ OVERVIEW
Sonya Fuentaz, an IRS-enrolled agent, has been contracted for preparing an annual income tax return for Carlito Alverez. Sonya is a little apprehensive about the engagement because she’s heard rumors that Carlito is a major drug trafficker with roots in Colombia. Sonia visits his home to discuss the details of his return and she’s shocked by the opulence she sees because the house is on 2 acres of land just west of the Intracoastal Waterway in Miami Beach. The land is completely surrounded by canals and connected to the rest of the city only via a narrow bridge that has small guardhouse and a security team protecting the entrance to the driveway. She sees other uniformed security guards walking around the perimeter of the property. The three story house appears to be as large as a small city block. She’s escorted by a housekeeper to a rear patio and garden where Alverez is sipping a martini and watching the large boats go by.
Carlito hates paying taxes and he needs an accountant who can save his money as much as possible. Carlito will pay $50,000 in cash, if Sonya agrees with the offer. Sonya needed the money and she said, she will accept Carlito offer. Before starting, Sonya asks Carlito not to tell about any illegal activities and she won’t be able to help Carlito if he does that. Carlito needs to completely truthful in his income tax return and must report all income, said Sonya. Carlito said that, the most of his money from commissions on international import and export business. He went on to show her detailed records of income and expenses. Most of the incoming funds had been deposited directly into foreign banks. Sonya takes that document back to her office and spoke to Julia Whitaker, her partner. Julia disagrees with what Sonya will do because they already know about the Carlito business activity. But, Sonya snapped, just because he’s rich and has a reputation doesn’t make guilty of anything.
Sonya is an IRS-enrolled agent who is tax practitioners. Sonya enrolled agent by IRS who preparing returns and assists in tax planning. Sonya has been contacted by Carlito Alverez who is interested in having her to prepare his annual income tax return. Carlito Alverez wants her to help him to save as much money as possible in paying tax by offering her $50,000. There are rumors saying that Carlito Alveres is a major drug trafficker with roots in Columbia. It makes Sonya feel less apprehensive about the engagement with Carlito Alverez. The higher offer by Carlito Alverez makes Sonya to accept the offer because she needed the money. If Sonya accepts the offer by Carlito Alverez, there are potential that Sonya might against the code of ethics as tax practitioners and could be finalized on her wrong doings.
➢ THE ENGGAGEMENT PROCESS
Fraud investigation engagement process consist of six steps that the investor need to go through. In this case, Sonya Fuentez which is the IRS- enrolled agent, should go through this process before she decide whether to accept the engagement or not. Since, Sonya was faced with a client that might have the income from the illegal activities, Sonya should be more careful in order to accept the engagement.
First and foremost, Sonya might create the incident report and case the file. She should collect the initial information such as the background of the nature of business of his future client. All the initial information should be place in the same file named unified case file. This file is to make the process become easier when Sonya want to trace back all the document related with this case. This file is also important to provide needed organization for administering and managing the case as it unfolds, to document th investigation for future review and use in optimizing the fraud management system and to be a case information repository that can be used in subsequent civil or...
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