Case 7

You are a new summer intern working for a major professional services firm. During your lunch break each day, you and a fellow intern, Bob, eat at a local sandwich shop. One day, Bob’s girlfriend joins you for lunch. When the bill arrives, Bob pays with a company credit card and writes the meal off as a business ex- pense. Bob and his girlfriend continue to be  “treated” to lunch for a number of days. You know Bob is well aware of a recent memo that came down from manage- ment stating casual lunches are not valid business ex- penses. When you ask Bob about the charges, he replies, “Hey, we’re interns. Those memos don’t apply to us. We can expense anything we  want.”

1.       Is fraud being committed against the firm?

2.       What responsibility, if any, do you have to report the activity?