When people hear the word “Embezzlement”, they tend to think of head honcho business men or women who have taken advantage of their position in a business or non-profit organization for their own financial gain. What many people may not realize is that embezzlement can happen anywhere, and to any company or organization, big or small. According to Ruggieri, one study performed showed that roughly 85% of the worst fraud cases were committed by none other than a member of the company’s payroll department (Ruggieri, 2012). I personally have caught a member of the payroll department at my previous place of employment stealing money from the company for her own financial profit. She was the payroll supervisor, had been with us for around 6 months …show more content…
It astounds me that someone would think it is acceptable to steal hard earned money from a company and its employees just to benefit their selfish endeavors. The owner of the company they steal from has worked tirelessly to build their business, then to have someone who thinks they can get away with it to steal from them, it’s just sad. The fact that I was able to stop the employee from stealing anymore from the company, felt great. I worked hard at my job there, and hard for what I earned, it wasn’t fair for her to just take what she pleased. I felt bad for the company because she had stolen a small amount of money from them, but then I also feel good because it didn’t go any further than it did. There was no way for our CEO or the CFO to know this was going on, the employee hid it so …show more content…
This theory was developed by Dr. Donald Cressey, who interviewed approximately two hundred inmates from numerous prisons who had been convicted of embezzlement. He found that three elements must exist at the same time for an otherwise honest person to commit the crime. These three elements are un-shareable pressure, financial or otherwise, perceived opportunity to commit fraud, and rationalization, or the ability to justify their actions (Kramer, 2015). There any many ways to protect the company against fraud and embezzlement. Having a good internal control system is vital in minimizing the chance for fraud to be committed. Some examples of features of a strong internal control system are segregation of duties, monitoring cash activity, requiring proper authorization of timesheets and expenses, ensuring that there is proper documentation of transactions and accounting reports, and protecting checks against fraudulent use by not allowing the writing of checks payable to cash, limiting access to checks, and keeping them in a locked area (Laufer,
I believe that asset misappropriation by accounts payable fraud is occurring at Wayland Manufacturing Company due to a lack of proper internal controls. Making the company’s Chief Accountant responsible for additional day-to-day functions provides him with opportunity to commit by creating fictitious vendors with his information and then creating fictitious invoices. Newbaker can then conceal his fraud by approving the invoices for payment. Employees working at an organization for more than five years are more likely to commit fraud. Therefore, Newbaker’s six-year history with the company has made him trustworthy and very knowledgeable, which could indicate involvement in asset misappropriation. The high employee turnover could represent a past fraudster leaving before getting caught or employees refusing to continue with the asset misappropriation. In addition, the varying monthly accounts payable transactions ranging from the lowest being April 2014 and
Nathan Mueller’s employer, ReliaStar was acquired by the large insurance company ING in 2000. Mueller had a deep understanding of accounting systems and was in charge of transitioning his old employer to the new ERP system. Mueller learned “all aspects of the ERP system including financial reporting, journal entries, and most importantly, checks and wire payment processing” (“Lessons Learned,” 2014). Mueller was an accounting manager of the reinsurance division at one of ING’s offices. He stole almost $8.5 million in a little over four years. Mueller’s department at ING was the reinsurance division, which gave him the ability to approve company checks of up to $250,000. He embezzled this significant amount of money from his employer by requesting
A relatively simple analytical procedure that could have been in place was a comparison of the actual payroll to the budget. Another procedure that could have prevented the fraud is using estimates of payroll based on the number of games during the pay period and the number of staff needed and comparing that short-term estimate to test how close the estimate came to actual payroll. If those comparisons were not close to actuals, then, in a separation of duties, another person or department should have looked at the time cards for comparison. Payroll registers should have been printed, approved, and retained. These are all examples of control and substantive tests which were not being
Over the past several years our country has been inundated with different scandals from different organizations or individuals. Unfortunately, scandals end up costing the average citizen money because of the selfishness of others creating these crimes. The latest scandal that the media has addressed is with Wells Fargo Bank. A team of roughly 5,300 employees came up with a scheme that would result in them receiving high paid bonuses and hitting their monthly and quarterly goals. In most cases, companies set unrealistic goals to encourage their employees to produce more revenue for the company. During the scandal the employees opened over 2 million phony accounts to boost their sales averages and paychecks. Per Egan (2016), “The way it
Highly placed managers also had the opportunity to commit the fraud. The CEO and other financial managers were working in concert.
Wells Fargo employee’s in 2016 and past years were creating accounts in their customers names without their approval or knowledge. The employee’s were not worried about the impact this would have on their customers, company and stakeholders. Opening over 1.5 million fake deposit account cost the company $185 million in fines and a possible loss of 30% of their customers (Cox, 2017). This just helps prove that this case has ethical problems but mainly focusing on the
Implementing strategies to create an effective internal control environment is needed to prevent and detect controls of fraud (Murphy, 2015). Control is needed to combat fraud, enforcing employees and volunteers to do the right thing. Management must have control of the organizations operations to tackle risks when they arise (Arshad et al, 2015). According to Arshad et al (2015):
Last year we had a member of our executive management team terminated. He was found to have been stealing money from the company for several years to the tune of around $80,000. He was the leader of our business development team, and would purchase personal items and write them off as business expenses. Essentially what he did was hide the personal expenses in his large business expense reports. Groups provide a shield of anonymity so that someone who ordinarily might be afraid of getting caught for stealing can rely on the fact that other group members had the same opportunity or reason to steal (Robbins & Judge, 2009). This particular employee was able to hide most of his transactions as other members of the group also had large business expenses. How could this have been prevented? It is important to establish a "zero-tolerance" program regarding employee theft. Make sure that it is understood, during orientation that the company will take legal action against employees caught stealing (Walsh, 2000). In addition a team built on a covenant requires more than just a loose and vague commitment to the relationship; on the contrary, entering into a covenantal relationship requires steadfast and active commitment (Fischer, 2012) thus providing the group with a mutual
Due to the person’s misinformation, an error can arise, since the person unintentionally caused the problem. If the person intentionally misinformed the event, a fraudulent event may occur (Reid & MacQueen, 2013). Wells (2002) identify three types of occupational fraud that occur in organizations: asset misappropriations, corruption, and fraudulent statements. Even though asset misappropriations commonly happen in organizations, these types of fraudulent activities classified as the least expensive. Meanwhile, fraudulent statements do not happen as much as the other types of fraud; however, fraudulent statements classified as the most
The employees in Wells Fargo had created fake bank accounts in the name of the customers without their acknowledgment. In order to prevent the same problem happens again, Wells Fargo should establish a strong control environment by knowing their employees well. Wells Fargo may develop a counselling session and evaluation form on satisfaction in the company for the employees to understand their feelings and intention. Fraud perpetrators will easily display their own behavioural traits that indicate the intention to commit fraud. An attitude change on the employee can clue the company about the fraud risk. If an employee feels a lack of appreciation from the company, he or she might commit fraud as a way of revenge to the company. By knowing the employees’ financial background, Wells Fargo can identify the potential fraud risk, Employees with good financial status and high satisfaction are least expected to commit the crime.
I believe that they might not believe that they’re doing anything wrong when it comes to payroll fraud because they will believe that upper management doesn’t look at what they’re doing because they trust them. Also, the will believe that since they have been doing payroll fraud for so long that no one would notice if they haven’t caught them yet, so they will continue to do it. Pocketing/spending money for personal use is another expense fraud employees’ commit because they have easy access to the money and spend how much they want. I feel that in this case an individual will do it a couple of times to see if they get caught, if not, the get swipe happy and buy what they want. They don’t feel as if this as bad as other organizational fraud because it’s only small amounts at a time not realizing after a while it adds up
In order to deter fraudulent activities by both management and employee, many companies employ an internal control system. A system of internal controls is a group of processes and procedures in writing, that are put into place by the organization to achieve operational efficiency, effectiveness, reliable financial reporting and to encourage incorruptibility. One of the major leading authorities on the issue is an organization out of the United States called the Committee of Sponsoring Organizations of the Treadway Commission (COSO), which is a joint initiative of five private sector organizations, who provide thought leadership through the development of frameworks and guidance on enterprise risk management, internal control and fraud deterrence,
Fraud can have substantial impact on a business no matter what size it is. Damages done to business organizations can be enormous ranging from financial loss, problem of public trust in the organization, shattering the company’s culture and morale and increase in audit costs.
When people saw a thief in the shopping mall to steal products from the shelves, based on morality, those people who saw would report to the shop manager. However if the situation happened in organizations, the reaction may not the same. On the first sight on the situation, it seems employees should blow the whistle to top managers or public for what they seen they thought there was wrong doing. However, for the second thought, if the organization caught by wrongdoing, it may wine up and let workers lose their jobs. Furthermore, if the manager is expert in manage the company and is a major character in company development, once the company lose this employee, it will be a great loss to company.
I gathered both employee's time cards and copied them to side by side for the last month. This made it clearer for my boss to see the difference in hours along with giving him the proof to show the employee being accused. I then phoned the owner and proceeded to give him the bad news. It felt like a knife in the gut to tell him a co-worker a friend was stealing from the company from him. The fact was I had no choice stealing is unacceptable in any form. I could not be well with myself if I did not report it. I also do not feel comfortable working with someone who steals I would not ever be able to trust them and I choose not to surround myself people that I cannot trust. Although it still felt terrible to be the one who had to accuse a co-worker knowing that it could very likely cost him his job and