However at the free clinic, authorities claim the SCOFF created an account at a Sacramento bank under a name salary to the federal office. For over two years he had clan workers return these checks. Which he deposited into this account that he actually owned. He allegedly set up several accounts with names similar to legitimate vendors. The SCOFF had payments intended for these legitimate vendors be sent to his dummy corporations and later cashed the same checks. These schemes began in June 2001 and went on for over two years.
After the irregularities were uncovered and investigated, the SCOFF was fired ND the case was turned over to prosecutors, who miraculously prosecuted and got a conviction. We say miraculously because white-collar crime is rarely prosecuted. Even more amazing is the fact that he was convicted. He was sentenced on April 30, 2008 to serve four years in prison, make restitution and pay back taxes and fines. Returning checks to anyone besides the intended payee is a break in best-practice procedures. What happened here demonstrates clearly why returning checks to anyone but the payee is such a bad practice.
Clearly the process for setting up new endorsed was lax at the clinic. Possible Solutions 1 . Use appropriate segregation of duties including master vendor file responsibilities. 2. Limit access to the master vendor file and require dual approvals before a new vendor is added to the master vendor file. 3. Do some sort of verification of new vendors, checking TIN and phone numbers to ensure you are not dealing with a phony vendor. Get W-as from every new vendor before making the first payment. Run W-as against the IRS TIN (Taxpayer Identification Number) Matching Program before making the first payment.
Check to e If duplicate vendors have the same TIN. Conclusion While very few organizations will employ all the practices described above, the more a corporation Incorporates Into their policy and procedures, the more difficult It Is for a fraudster (either an employee, former employee or someone else) to steal from the company. The Height Suburb Free Clinic: Internal Control Case Study By Saying-Chou Saying Chou According to published reports, what happened at Height Suburb Free Clinic is typical of the types of employee fraud that happens day in and day out at many organizations.
It was nothing overly sophisticated and demonstrated how insiders own enrichment. A former SCOFF of the clinic took advantage his knowledge that money is supposed to go directly to a federal office. However at the free clinic, similar to the federal office. For over two years he had clinic workers return these checks, which he deposited into this account that he actually owned. He allegedly set 1 . Use appropriate segregation of duties including master vendor file responsibilities. See if duplicate vendors have the same TIN. A corporation incorporates into their policy and procedures, the more difficult it is for