Another case of embezzlement in a small company. Accounting manager of Schmitt, Inc an air conditioning and electric company in Dade City, Florida, was charged with embezzling half a million dollars from the company.
Michael Cougill, the manager, forged and cashed fraudulent checks. He forged checks to pay personal bills for loans, home repairs, etc. Cougill bought cruise line tickets, paid for hotel room for himself and his family using the company’s credit line with Synovus bank. Cougill failed to make cash deposits at Synovus Bank during times he was given tens of thousands of dollars in cash to deposit into the company’s checking account. And it doesn’t stop here; he applied for a Chase credit card in Schmitt’s name and used that also to make thousands of dollars in purchases.
Over the period of around 2 years, October 2010 and July 2012, Cougill embezzled approximately $535,000 from the company.
This is another situation of lack of segregation of duty as well as lack of supervision and internal controls. Smaller companies seem to be getting hit by this issue more and more.
Another case of embezzlement in a company due to lack of segregation of duties. Debra Skies who has been working as the office manager at McCord Engineering, Inc. since the company’s inception in 1985 recently turned herself in for embezzlement. Debra was let go earlier which was unrelated to the theft. The new office manager while looking at the books found accounting discrepancies and reported the same.
It was found that Debra was paying off her personal credit card bill using company funds. She has stolen approximately $217K from the company through the years. How was it possible and why was it not found earlier. As the office manager, Debra was in charge of accounting as well. She did everything under the accounting umbrella, from payroll to bookkeeping to AP. This is a perfect example of the fraud being committed due to lack of segregation of duties. With fewer employees wearing multiple hats, smaller companies are very susceptible to such fraud.
The Cayman Track Limited, a governmental authority that runs the horseracing tracks in Jamaica, has come under the radar for its improper accounting practices. An audit was commissioned by the Ministry of Finance to look into the reasoning behind the entity getting into a financial mess.
The audit found that the payables accounting is highly flawed. There is lack of required documentation for payments to be made; which is a direct contravention of the Financial Administration and Audit (FAA) (Instructions) Act. The law states that “each payment of public money must be supported by a payment voucher or a claim which incorporates the details required for a payment voucher”. CTL allegedly breached the law as the name and address of payee were not available or documented on the payment voucher or on any supporting document attached. Several payment vouchers did not include information regarding the work performed, services rendered or details of goods received.
When payments are made CTL is required to rubber stamp the bills/invoices and supporting documents as “paid” and an authorized official should certify it, but there were multiple payment documents that were found without the stamp. This could easily lead to multiple payments to vendors or worse lead to misappropriations of funds.
CTL is also charged of not following the FAA Act on another issue. The inventories or stores ledgers recording the cost and dates of acquisition of all public property must be properly maintained to support the write-off of any losses or deficiencies, which the company failed to do. A case in point was that a generator was stolen in 2009-2010 but there was no documentation of the generator on the fixed asset register. This is again something that could lead to misuse of the assets of the company. If the asset is not on the books it could very easily be sitting at an employee’s house!