Case Studies

The accounting clerk in a small business was responsible for payroll and accounts payable. Another employee noticed he was cheating on his timecard and informed management. He was confronted, claimed it was an error and given a warning. A few weeks later, he shared information with co-workers that resided on a confidential network drive; he had gained access to the drive and just couldn’t keep it to himself.

Several months later, while preparing W-2 forms for employees, the manager noticed that the accounting clerk’s payroll tax withholdings were lower than they should be. Upon further examination, she discovered that the enterprising accountant had doubled his salary on several of his paychecks, which amounted to about $40,000 in unauthorized “bonuses” during the year.

Lesson

When employees cheat on small things, cheating may be a habit they find hard to break. In this case, there were at least two incidents prior to the discovery of the theft where the accounting clerk abused his position and behaved unethically. Most businesses have an excellent informal communication network; everyone knew about the accounting clerk’s moral flexibility. By not taking action sooner, the owner effectively sent a message to employees that accountability and transparency were not valued in his organization – and he paid a price for it!