Tuesday, August 2, 2005

Who Is Minding the Cash Drawer?

The old saw is that the best way to steal from a store or bank is to work for it, especially if you're a trusted employee.  Similarly, when the accounting firms advise clients on their internal controls, one of the key steps to ensuring that employees do not embezzle is to require double checking of expense submissions so that one person cannot submit false bills or set up fake accounts.  It appears that big four accounting firm Deloitte & Touche's internal controls may not have been up to snuff, based on the indictment (and arrest) of a former manager for Deloitte Consulting LLP, Jamie Watkins, on mail and wire fraud charges for stealing approximately $500,000 from the company. According to a press release (here) from the U.S. Attorney's Office for the Central District of California:

Watkins allegedly exploited Deloitte expense reimbursement programs to defraud the firm out of approximately $550,000 from June 2000 until October 2003. The Indictment alleges that Watkins used several schemes to perpetrate the fraud on Deloitte. In one scheme, Watkins used her company credit card to pay for personal items knowing Deloitte would pay the account balance. Using her company credit card, Watkins allegedly paid her property taxes and made numerous purchases, including jewelry, clothing and a wine cellar. Second, Watkins sought and received reimbursement payments for purported business-related purchases that Watkins paid for with a company credit card. Watkins allegedly had no out-of-pocket expenses, but she submitted documentation claiming business-related expenses. Finally, Watkins allegedly created false invoices for non-existent purchases and submitted reimbursement forms and phony receipts to receive reimbursements. Based on Watkins' allegedly fraudulent acts and false representations, Deloitte made reimbursements and paid off the account balance on Watkins's company credit card.

I assume this won't become a case study for the firm for its internal controls testing for other companies. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/08/who_is_minding_.html

Fraud, Prosecutions | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef00d8355277c169e2

Listed below are links to weblogs that reference Who Is Minding the Cash Drawer?: