Someone Forgot To Check the Books

November 16, 2012 | By Jerry Ashworth | Post a Comment

One of the disturbingly interesting things I enjoy about my job covering grants management and single audits is those occasional meetings I attend where an auditor or investigator is discussing fraud, complete with examples of recent fraud cases. What really amazes me when listening to the details of the fraud cases is the brazenness of the perpetrators. You just have to wonder how they were able to get away with it for so long?

Almost inevitably, there is the typical case where a local bookkeeper who everyone seemed to trust because she had done the job for years winds up being the “mastermind” behind one of these fraud cases. In a recent check of the news, we find it has happened again — although the bookkeeper was the town comptroller.

A former comptroller in Dixon, Ill., a town of about 15,000 residents, recently pleaded guilty in a federal court to embezzling some $53 million from city accounts. What did she do with the money, you ask? Bought a $2 million custom RV and a Florida vacation home, and a massive horse-breeding farm with 400 horses! Surely someone could have questioned earlier how a comptroller in a small Illinois town, on her $80,000 salary, can afford all these super-extravagant items.

Again I ask, how did this go on so long? Obviously there was a serious lack of internal controls in the Dixon government. It also seems to me that if this city government was audited, and surely it was, the auditor severely missed numerous warning signs and fell asleep at the switch.

A little common sense by those in charge of governance or by an auditor can go a long way to help limit some acts of fraud from reaching the level of the Dixon case. And if nothing else, keep a close eye on the nice little bookkeeper/comptroller.

Do you know of similar fraud cases? We like to hear them. And for more coverage and analysis on how to control fraud, turn to Thompson’s Federal Grants Compliance eXpert | Single Audit Information Service.

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