ers a lot of travel. Testing the accounts
of the people with the most posted credits would have similarly flagged Larry.
Also, Larry averaged three payments a
month on his credit card over the course
of a year, an unusual pattern that, if
identified, should have been investigated.
Testing the top 25 corporate credit
card users and searching for unusual patterns are the staples of any audit program that contains tests designed to
Employees should take the extra
step. If employees are presented with
a transaction that they do not completely understand, they should do
to their own processes and send the
check directly to the third party.
Act quickly and decisively. Larry was
a long-time employee of ABC, and
he was well-liked in the organization. It would have been easy for the
company to ask Larry to pay the
money back and call it even. However, management and the board
called for a full investigation, led by
the internal audit group that
included outside consultants, legal
counsel, and the district attorney.
Management also decided to not
keep it quiet; they let the finance and
accounting organizations know what
was going on so that it became clear
to everyone that ABC would not treat
Thieves can get greedy. In this case,
Larry had already left the company.
His fraud might have gone undetected if he had not returned for one
SCOTT LANGLINAIS, CPA, provides fraud and
audit advisory services in Dallas.
To comment on this article, e-mail the author
Please send your fraud findings to:
courtenay thompson & associates
10,000 North Central Expressway
Suite 1006, Dallas, tx 75231 USA
Management decided not
to keep it quiet; they let
the finance and accounting
what was going on so
that it became clear to
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what it takes to understand the
transaction. Jennifer was one of the
custodians of the organization’s cash,
so when someone asked for money
from the company, even a trusted
former boss, it was important for her
to understand the nature of the
Segregate duties. This is a concept that
is drilled into the brains of internal
auditors ad nauseam, but it is not necessarily communicated as often to
operational management. The organization’s head treasurer, to whom
Larry reported, was an ex-auditor and
ex-controller, and therefore should
have been aware of this control concept. However, during the course of
business, when times are good and
everyone is busy, it is easy to overlook
the fundamentals. Larry had too much
control, and because accounts payable
trusted him, the clerks did not adhere
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FEBRUARY 2004 INTERNAL AUDITOR