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Marauder Corporation operates a chemical plant in northern Michigan. The terms of a state- issued permit require Marauder to test and report on the water quality of a nearby creek each quarter. Marauder has contracted with a lab in New Jersey for the past five years to test water samples taken from the creek. No chemicals from Marauder's operations have ever been detected in the creek. Approximately two weeks ago, the New Jersey lab experienced a fire and notified Marauder that it might not be able to complete the latest tests on time. To ensure that it filed the state- mandated report on time, Marauder sent the latest quarter's samples to both the New Jersey lab and to a lab in Grand Rapids. The Grand Rapids lab report indicated the presence of a dangerous chemical in the creek that could only have come from Marauder's plant. The New Jersey lab's report arrived prior to the deadline for reporting to the state, but does not mention the presence of the dangerous chemical. In a routine internal audit, an auditor discovered that the plant superintendent filed the report with the state using the New Jersey lab report without mentioning the findings of the Grand Rapids lab. The auditor also found that the CEO had been informed about the Grand Rapids lab report and directed the plant supervisor to ignore it. Required: 1. In light of the above, describe and discuss the action(s) the auditor should take? 2. What are the top risks? 3. What are the long term consequences? 4. Would you consider this fraud? 5. What are the compliance isues

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