Employee Fraud and Unsupervised Financial Access

Every business should have some controls in place when it comes to their money, but it takes more than just having words on paper. Policies must be enforced to be effective.

Recently, the accounting and compliance manager for the Oklahoma Beef Council was able to circumvent the internal controls and commit employee fraud. Why? The opportunity for fraud came from the lack of follow up on a written policy related to signing company checks.

For almost six years the accounting manager, not an authorized signer on the bank account, had a signature stamp. She was given authority to use it only on limited occasions. Sometime in 2010 she was instructed to stop using the signature stamp, but since management never physically took away the stamp, she was able to keep using it without their knowledge.

Lack of management oversight allowed her to forge 790 unauthorized checks from the business accounts and put those funds directly into her personal account. Through her position, she was also able to make false accounting entries to cover up the forged checks. She eventually pled guilty to embezzling $2.6 million and signing a false tax return.

Does your business need help detecting red flags for employee fraud? If you find yourself in need of a forensic accounting expert witness or investigator, contact Mike Rosten, CPA, CFE.

                                             

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