Ais

Front 1

Criminal 1: McKinley Tabor – First National Bank

Back 1

* was totally in charge of the accounting and internal audit departments
*made accrual entries
*reconciled the accrual accounts
*issued bank checks for interest income
*telephoned to correspondent bank to issue payment on personal credit card account
*expensed the charges on his bank’s books (made a journal entry to expense accounts)

Front 2

Criminal 2: Kay Lemon – White Electric Company

Back 2

*was the sole bookkeeper for the company
*wrote all the checks to pay all the bills
*balanced the checkbook
*wrote checks to herself, using her true name
*if bill for $15,000, she would write check to company for $15,000, write on check stub
*$20,000; write the next check to herself for $5,000 and write VOID on that stub

Front 3

Criminal 3: John Faulkner – insurance company

Back 3

*borrowed against the cash value of clients’ life insurance policies
*checks were sent to him to forward to the clients
*he deposited the checks into his own account

Front 4

Points all three criminals made to managers wanting to prevent fraud

Back 4

*Know your employees
*Create an environment in which you have controls and enforce them
*Segregate duties (authorization, custody, recording)

Front 5

Factors that influence the likelihood of fraud

Back 5

*Financial pressure (opportunity)
*Opportunity (due to low internal control)
*Integrity

Front 6

Red Flags

Back 6

-financial pressures
-personality changes
-poor money management
-living beyond means
-outside business interests
-poor internal control, especially as involves counting and timely review of liquid assets
-rising business costs
-too much trust in key employees
-failure to pre-screen employees

Front 7

Fraud Facts

Back 7

*Most fraud instances are not caught by auditors.
*Most are caught by accident or by co-workers.
*Most fraud perpetrators rationalize it as a loan they intend to pay back. *80% of embezzlements are by employees who are acting alone. *20% involve collusion.