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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 table fraud in your community.” With apologies: Harold Hill – The Music Man. Avenues to Fraud.

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Ya Got trouble…

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  1. 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

  2. Avenues to Fraud • Purchasing Card Fraud • Theft of Equipment • Travel Reimbursement Fraud • Payroll Abuse

  3. 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

  4. 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.”

  5. Show me the money!

  6. 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.

  7. Reckoning… • Lost job at BYU • Prosecuted for $53,000 of theft • Plead guilty to all charges (felony) • Required to pay back the loss

  8. I bought too much… • Cardholder purchases computers, toner cartridges, etc. • Sells the equipment on e-Bay™ • Items sell quickly because of the low price.

  9. Inventory Control

  10. 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

  11. 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™.

  12. Transparency and Accountability

  13. Reckoning… • Turned over to police and county prosecutor • Likely will be charged with multiple felony counts.

  14. 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.

  15. Two Sets of Eyes

  16. 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.

  17. 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.

  18. 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.

  19. What Problems Do You See?

  20. CES Audit Committee… • Where was the controller? • How are we disciplining the approvers?

  21. Traditional Controls User Placing in Service

  22. P-Card Controls User

  23. P-Card Controls User

  24. The key… Management awareness and involvement.

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

  26. 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?"

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