Sterling

Case 2

Phase 1

This case asks you to apply your  accounting skills to a specialized area of forensic accounting, insurance fraud. In particular, you should consider the possibility of a fraudulent claim for long-term disability insurance. The Background Information provides a brief description of disability insurance. The Disability Insurance Claim Information gives details about the policyholder’s claim and financial condition. In the Questions for Phase 1, you will identify and discuss issues and concerns you might have as an insurance fraud investigator.

1. What type of income is Dr. Sterling hoping to replace?
2. In general, do you notice anything unusual about the Personal Statement? Consider that Dr. Sterling is 59 years old and his children are adults. He is a surgeon, and surgeons usually work a lot, and are usually high-income professionals.
3. What accounts on the Personal Statement should you investigate? Why? Please be specific as to why these accounts are of concern.
4. Consider accounts that you do not see on the Personal Statement. Please identify these accounts and discuss what concerns you would have because these accounts are not reported by the Sterlings. In other words, what accounts might you expect to see on such a Personal Statement for a high-income family?
5. Here are two guidelines usually used by claims investigators in these types of cases:
(1) If a person is trying to accumulate wealth, his or her home should cost at least twice as much as his or her take-home pay.
6. What concerns do you have about Dr. Sterling and his disability insurance claim?
7. What additional sources of information (documents, interviews, etc.) should you request or search for?