Case Studies

A trusted 20-year manager managed to steal at least $1 million from a small firm over 5 years. The manager controlled all aspects of bookkeeping except one of three owners signed all checks, and a local CPA firm prepared month end financial reports.

The manager used a variety of schemes involving payroll (doubling her pay), making personal purchases with company funds and rotating petty cash checks among check signers so that the owners didn’t realize she was replenishing petty cash every week.

Lessons

• What’s that saying about too many cooks spoiling the pot? Having too many people involved in oversight can be as risky as having too few.
• Having an outside CPA firm prepare your monthly financials is not of much value if they never look at the detail or supporting documentation. If owners don’t provide oversight, they should pay someone else to do so, and it should be someone who is familiar with embezzlement schemes and red flags of fraud, like Averti Fraud Solutions.