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Ya Got trouble…. “Well, either you're closing your eyes to a situation you do not wish to acknowledge, Or you are not aware of the caliber of disaster indicated by the presence of a pool table fraud in your community.” With apologies: Harold Hill – The Music Man. Avenues to Fraud.

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ya got trouble

Ya Got trouble…

“Well, either you're closing your eyes to a situation you do not wish to acknowledge,Or you are not aware of the caliber of disaster indicated by the presence of a pool tablefraud in your community.”

With apologies: Harold Hill – The Music Man

avenues to fraud
Avenues to Fraud
  • Purchasing Card Fraud
  • Theft of Equipment
  • Travel Reimbursement Fraud
  • Payroll Abuse
avenues to fraud3
Avenues to Fraud
  • Cardholder abuse and fraud
    • Diversion of goods to personal use.
    • Purchase from vendors with conflict of interest.
    • Sale of goods to others (generally via internet)
    • Purchase from cardholder’s own “store” at a markup
oops a mistake
Oops…a mistake!?
  • Employee makes a

personal purchase on-line.

  • Inadvertently selects the institution’s P-card as the method of payment.
  • Notes the error and indicates in the explanation that it was a mistaken personal purchase and will be reimbursed.
  • Fails to reimburse the

institution.

“I say, first, medicinal wine from a teaspoon,Then beer from a bottle. An' the next thing ya know, Your son is playin' for moneyIn a pinch-back suit.”

the plot thickens
The plot thickens…
  • Noticing that the approver never questions her P-Card purchases, an employee buys items for personal use.
  • Employee provides fictitious explanation for purchase.
  • If supporting detail is requested, employee “doctors” the invoice to reflect a valid business purpose.
  • Employee sells goods through her internet store which gets great ratings for service and value.
reckoning
Reckoning…
  • Lost job at BYU
  • Prosecuted for $53,000 of theft
  • Plead guilty to all charges (felony)
  • Required to pay back the loss
i bought too much
I bought too much…
  • Cardholder purchases computers, toner cartridges, etc.
  • Sells the equipment on e-Bay™
  • Items sell quickly because of the low price.
reckoning10
Reckoning…
  • Lost job
  • Prosecuted for $200,000 in theft
  • Plead guilty to multiple felony counts
  • To be sentenced in March 2010
  • Will be required to make restitution
byu examples cont
BYU Examples cont…
  • Manager “can’t be bothered with the mundane activities associated with approval of purchasing card activity,” so delegates it to the cardholder.
  • Over four years, the cardholder purchases over $150,000 in merchandise and sells it viae-Bay™.
reckoning13
Reckoning…
  • Turned over to police and county prosecutor
  • Likely will be charged with multiple felony counts.
byu examples cont14
BYU Examples cont…
  • Professor buys books, equipment, supplies needed for his class and for “course development.”
  • Items include Nintendo Wii, video games, children’s books, how to books, etc.
  • Items are gift-wrapped and given to professor’s children as Christmas gifts.
purchasing card
Purchasing Card…
  • No detailed receipt.
  • Inadequate explanation in “notes” box.
    • Name of book
    • Business purpose
    • Names of personnel being hosted
  • Unusual level of purchasing activity.
  • Purchases noted “personal-to reimburse.”
  • Items appear to lack a good business purpose.
travel reimbursements
Travel Reimbursements…
  • No travel plans and/or expense reports.
  • Duplicate reimbursement claims.
  • Missing receipts.
  • Personal travel claimed as university business.
  • Upgraded rental vehicles while claiming standard.
  • Lack of detailed explanation of business purpose.
  • Absence of names of persons hosted.
payroll
Payroll ….
  • Frequent pattern of edits (corrections for not using time clock)
  • Shifting time between pay period to avoid overtime (create comp. time)
  • Routine or excessive overtime without prior approval.
  • No documentation to support time-card edits.
  • “Pat-my-back” approvers.
  • Pattern of not using time-clock nearest to work station.
ces audit committee
CES Audit Committee…
  • Where was the controller?
  • How are we disciplining the approvers?
traditional controls
Traditional Controls

User

Placing in Service

the key
The key…

Management awareness and involvement.

hotline
Hotline
  • BYU.edu: Hotline
    • https://secure.ethicspoint.com/domain/en/report_custom.asp?clientid=17652
  • Ethicspoint.com
ya got trouble26

Ya Got trouble…

Heed the warning before it's too late!Watch for the tell-tale sign of corruption!The moment your son leaves the house,Does he rebuckle his knickerbockers below the knee? Is there a nicotine stain on his index finger?A dime novel hidden in the corn crib?Are certain words creeping into his conversation?Words like 'swell?"