Police: Manager stole $300 000

http://www.berkeleydailyplanet.com/issue/2010-02-04/article/34580?headline=Daily-Planet-Hit-by-Massive-Payroll-Fraud

Summary

For more than five years, Cynthia Jo Lark has been continuously forging payroll cheques with Fasold’s signature (as president of the Northumberland Sewer Authority) and those of Jack Synder (authority treasurer). Recently resigned from the Borough Council member, Cynthia claimed to be able to create fake cheques as part of her role as office manager, resulting in a scam totaling approximately $300 000. Charged with forgery, theft, and receiving stolen property, she was originally hired in 1994 as a clerk with accounting and payroll duties, later transferring money from the authority’s general account at the bank into the payroll account. To take advantage of the system, she wrote cheques for herself with an excess amount than the authorized pay, by forging the names Fasold and Snyder. In addition to writing fake cheques, she also created fictitious audits to make it appear official that she was keeping the accounting books in order.

Connection

In Chapter 14, we learned that good internal control is required in order for an accounting system to run accurately and efficiently. Not only is theft from customers common, but businesses are becoming more aware of employee theft and fraud because they do not want to take any chances about an employees’ honesty and dedication. To maintain strong internal control, businesses are recommended to have more than one person process and prepare the accounting documents to ensure accuracy, have different people record transactions and handle the physical assets, and have an independent public accountant periodically perform an audit to check if the accounting system is running smoothly.

Reflection

It is saddening to observe how employees would risk their honesty to the business they are working for due to greediness. In the future, businesses should be more careful about the employees they hire by checking their criminal records and possibly allocating another employee to countercheck the accounting and payroll duties to ensure accuracy. Also, instead of fully trusting the employee and asking if she has taken care of the audits, the employer should follow through with the audit to make sure it has actually been done. Although a good system of internal control may not eliminate all aspects of employee fraud, it can definitely reduce the possibility of it, leading to future successes of a business.