Lessons Learned from an Ex-Cashier Who Must Pay Back $12.9 Million in Embezzlement Case
 5/4/2017

Employers want to trust their employees, especially those in key positions who are tenured with the company. But yet again, the news brings us another story of how employees break that trust. This recent article reports that a long time employee used her position to embezzle company money to live a lavish lifestyle and allow her husband to retire. Cynthia Mills was a cashier and treasury specialist for a manufacturing company and was in charge of depositing checks and handling wire transfers. To accomplish her scheme, she set up a bank account in the name of a fake company and wired money into that account. It seems that her scheme was so well thought out that even the company internal auditors missed it.

What lessons can we learn? What controls may have prevented her ability to steal millions from her employer? These key components of fraud detection were missing:

  • Segregation of duties. No one person should have the ability to approve and set up new vendors and transfer money, no matter what their company ranking or position. At least two people should be involved in the process.
  • Vendor background checks. Know who your vendors are before doing business with them.
  • Review invoices. Implement procedures for reviewing and approving invoices. Different people should approve and set up vendors.
  • Checks and balances. All employees and departments should have checks and balances, no exceptions. Ironically, the most trusted, high-ranking and long-time employees are typically the ones who commit fraud.
  • Surprise Audits. Perform surprise audits and let employees know that this is standard procedure. Fear of being discovered may effectively neutralize the opportunity component of the fraud triangle, preventing embezzlement schemes from happening in the first place.

Long-time employees are trusted, but sometimes they abuse that trust and commit fraud. For more information on preventing fraud in your organization, contact Mike Rosten, CPA, CFE for a fraud checkup checklist.