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Fraud At Samone Essay

1171 words - 5 pages

Fraud At Samone Enterprises

Fraudulent activities were revealed at Samone Enterprises in which a payroll clerk, Cindy White, embezzled more than $194,000 in 5 years.

Summary
Samone Enterprises is a packaging products and services company. Cindy White worked for Samone for almost 10 years as a payroll clerk. White worked in a small department and was accountable for payroll for about 250 employees who worked different shifts 24 hours a day, 7 days a week. Since Samone used a clock-in system to track payroll, employees forgot to clock in or out constantly, so they needed to complete a missed clock report in order to get paid for unrecorded hours. Manual paychecks were used to adjust ...view middle of the document...

White embezzled more than $194,000 from Samone in 5 years.

Control Weaknesses at Samone
1.One main control weakness was a lack of controls around authorizations. In order for White to process a check to an employee, she only needed Gonner’s signature for approval. After Gonner signed off on the manual paycheck request form, White was able to process the check easily because she could print a manual check and it was signed off by the check signing machine and imprinted with two authorized signatures. There was no real authorization because the machine was signing the check, so no one had to authorize the check was valid. In addition, there was no monitoring on the authorization of Gonner’s signature, since White forged her signature on 60% of the manual paychecks processed.

2.Another control weakness was lack of segregation of duties. White was in charge of processing payroll for her business unit and she was able to process the checks without authorized approval because the check was automatically imprinted with two authorized signatures, so no one was checking her work. The checks should have been signed by the CFO, treasurer, etc, and then sent to an office manager or someone in a similar roll for approval. White was the only one processing all the checks in her business unit, so chances of her getting caught doing something fraudulent were unlikely since she processed all payroll requests and she was the final person with the checks before they were available for employees to pick up.

3.Samone lacked monitoring and oversight of transactions since it took 5 years to discover the fraud committed by White. Burke, the controller, only discovered the fraud because he was helping a manager who needed a manual paycheck request form on a day that White was not in the office. Managers reviewed payroll expense reports twice a month for their department, but no one was monitoring White because they trusted that if there was a mistake, she would properly fix it. She processed payroll on her own without any help or supervision. White should not be the only one processing payroll in her business unit; there should be another clerk or a supervisor who oversees her work for every payroll period. Having two people work in payroll processing or share similar duties also helps if one employee is on vacation, sick, or leaves the company.

4.There was a lack of routine audits at Samone for payroll processing. An important task, like...

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