City of Springfield

CITY OF SPRINGFIELD

AIS CASE # 1

May 27, 2012

Business should have internal controls in place to help prevent fraudulent activities by their employees’. The City of Springfield had an embezzlement scheme committed by their Chief Financial Officer, Mr. Sims. Mr. Sims would intercept the delivery of the City Hall mail from the postal clerk. Mr. Sims would steal check written out to the city and deposit them into his personal account.

In committing this fraud, Mr. Sims violated preventive and detective controls procedures define in the City of Springfield mailroom policies. The policy states that checks should be log into the computer file and a receipt should be prepared. Another employee should then verify the checks received and then the bank deposit be made by a third employee. Mr. Sims perform these entire task himself, thus given him the ability to embezzle the money, and to continue until it was detected.

Mr. Sims committed management and employee fraud against the City of Springfield. The stealing of the money and deposit it into his personal account is considered employee fraud. However, to cover up his fraudulent activities, Mr. Sims would have to create fraudulent reports to show that the money had been received and deposit into the City of Springfield bank account. The creation of fraudulent reports is considered management fraud.

The City of Springfield had adequate procedures in place to help deter employee fraud. The small staff size and budget did not allow the procedures to be followed. This gave Mr. Sims the opportunity to commit the crime.

The limited staff also allowed the crime to go undetected. If the City of Springfield had a mailroom clerk, they could report or inquiry why the mail was not being delivered to the mailroom. Once they discovered Mr. Sims was intercept the mail from the postal clerk, they could have report this to the CEO or Mayor of Springfield.

In the case of the City of Springfield, I do not...