How does the accountant fit the profile of a fraudster?
The accountant fit the fraud profile in that he was
An honest, valued, and respected members of the community.
How does he not fit the profile?
He invested a portion of his ill-gotten gains instead of spending it like the typical fraudster.
What fraud scheme did he use to perpetrate his fraud?
The accountant prepared fake invoices from legitimate contractors, wrote checks to pay the invoices, and then deposited the checks into a bank account he had opened under the name of one of the companies
What controls could have prevented his fraud?
All the accountant had to do was create fictitious invoices, as he had custody of checks before and after they were signed and he had the authorization to approve payments and sign checks. The fraud could have been prevented by separating accounting duties
Restrict access (custody) to company checks and the check signing machine to someone that does not have recording or authorization responsibilities.
Do not permit the person that prepares the check to disburse the check (mail it to the recipient, etc)
Have someone familiar with the contractors authorize payments – someone who would have known that the goods and services were never ordered or performed. This should be someone other than the preparer of the check; that is, someone without custody or recording functions.
Require that someone other than the people with custody and authorization responsibilities record the payments.
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