Patricia K. Smith, Controller for Baierl Acura Auto
Dealership in Cranberry, Pennsylvania, thought she could “earn the love” of her
family and friends and “see what happiness really looked like” when she decided
to systematically begin stealing from her employer. During the next 6 ½ years,
she misappropriated over $10 million – averaging almost $30,000 per week.
While her rationale for the theft may be used to question
her sanity, the damage caused by fraud of this magnitude permeates throughout
other industries as well. Small business owners and national corporate boards
alike begin to think, “What if this is happening to us, right now, from one of
our employees?” and “Can we trust our Accounting Department?” Businesses can
and do regularly take reasonable steps to ensure fraud prevention, implementing
simple internal controls such as separation of duties and forbidding the sharing
of passwords. But the sting remains for management that one of their most
trusted employees was able to commit these acts with controls in place. Now,
their focus is keyed upon the new hires, and emphasizing that “it won’t happen
again.” What the thief has really stolen is the trust management had in their
subordinates.
Management of course does not come out and blatantly say, “We
don’t trust you”, but they show it in other ways, such as micromanagement.
Taking managing to an extreme, they are critical of all expenditures, down to
the cost of paper clips and where the stock of paper clips has gone. Cash
inflow is scrutinized to ensure it is deposited before supporting staff know it
exists. This places an extra burden upon remaining employees and new hires,
taking time from regular duties to satisfy the resulting paranoia. Productivity
is reduced, and morale sinks to new lows. The actions of one whom has not
worked there in months or years is still damaging the company, only to end when
management can trust again – or valued employees begin to quit for a less
overbearing environment.
Once the waves of turmoil have receded, the company is
usually intact but the overall cost of mistrust has affected possibly dozens of
lives, and the goodwill and experience the company had built over years are
lost due to one person’s selfish actions. If you are a business owner and suspect
fraud, contact a forensic accountant to investigate. The fee to determine a
finding of non-fraud can be far less than the damage of suspicion or monetary
loss.
(Credit for certain facts for this post: http://triblive.com/home/1549777-74/smith-leniency-million-judge-attorney-company-federal-herself-miller-baierl)
