The time has come for a change in continuing education. Pertinent and relevant training that engages and leaves attendees with tools to manage the latest requirements in risk and controls management. Trainers should not be reciting from text books and training firms, large or small, should have a foundation of experienced trainers and consultants that are not merely for hire, but actually part of the company you are hiring. It is time for Verracy!
Mary Breslin, CFE, CIA
President, Empower Audit
Sometimes stopping a fraud and terminating an employee are all you can do. Even though those are two accomplishments in themselves, they can leave you wondering, “What do I do when the authorities are not interested in criminally prosecuting an internal fraud?”
One of the easiest fraud cases I ever worked was also one of the most frustrating. My team and I did solid work and had iron-clad evidence, but we couldn’t convince the local authorities to do anything with the information. Unfortunately, it was one of those scenarios where the executives really wanted to prosecute and make a clear example of the situation.
As the chief audit executive, I reported to the general counsel for my organization. It was a great arrangement in my opinion, and I enjoyed working for him. We were a large international organization with operations in many developing nations. My team was routinely involved in fraud investigations, often on multiple continents simultaneously. But this fraud — this fraud was close to home. Literally in the office next door. The general counsel’s paralegal had been committing expense reimbursement fraud for two years, and the general counsel took it personally. Wouldn’t you?
A perceptive accounts payable clerk noticed some issues with the paralegal’s expenses and informed us of the inconsistencies. After a little research and some data analytics, we quickly found tens of thousands of dollars in purchase card (pcard) and expense reimbursement fraud. She had two major schemes. First, she paid for things with her pcard and then listed the items for cash reimbursement on her personal expenses. She always had a receipt! The opportunity had presented itself to her when she realized the general counsel did not closely review her expenses. Second, she charged a considerable amount of personal items to her company pcard. I won’t get into details, but I do believe she had everything ever made by Victoria’s Secret.
Understandably, the general counsel felt a lot of things —anger, frustration, betrayal and a little foolishness for trusting her and not reviewing her expenses in detail. As a result, he wanted her charged criminally. She was not getting special treatment — we wanted to follow our normal process to prosecute for internal fraud. However, while there was approximately $30,000 in fraud, the local authorities were not interested in prosecuting. Why? Like most things in life, it was mostly about timing. At that particular moment in time, the local authorities had bigger cases they were concerned with and did not believe they could spare the resources to deal with our fraudster.
The final outcomes of even successfully executed investigations can be very frustrating and less than satisfactory. So how can this be prevented? It is always a potential problem, but if you do the following you are less likely to run into this issue:
Remember: Catching the fraudster and ending the fraud is a deterrent to other fraudsters, so do not allow yourself to get too frustrated. Stop fraud and carry on!