The Haight Ashbury Free Clinic: Internal Control Case Study

According to published reports, what happened at pinnacle suburban area Free Clinic Is typical of the types of applyee fraud that happens daytime In and day step to the fore at many organizations. It was nonhing overly sophisticated and exhibit how Insiders who know the peculiarities of differing requirements use their knowledge for their possess enrichment. A former travesty of the clan took advantage his knowledge that requires nonprofits receiving federal official grants to rescue any odd money. This money Is supposed to go directly to a federal office.However at the exonerate clinic, authorities claim the SCOFF created an account at a Sacramento bank under a name salary to the federal office. For over two years he had clan workers return these checks. Which he deposited into this account that he actually owned. He allegedly point up several accounts with names similar to legitimize traffickers. The SCOFF had payments mean for these legitimate vendors be sent to h is dummy corporations and later cashed the same checks. These schemes began in June 2001 and went on for over two years.After the irregularities were uncovered and investigated, the SCOFF was fired ND the case was turned over to prosecutors, who miraculously prosecuted and got a conviction. We say miraculously because white-collar crime is rarely prosecuted. Even more amazing is the fact that he was convicted. He was sentenced on April 30, 2008 to serve four years in prison, make restitution and pay back taxes and fines. Returning checks to anyone besides the intended payee is a break in best-practice procedures. What happened here demonstrates clearly why go checks to anyone but the payee is such a bad practice.Clearly the process for setting up spick-and-span endorsed was lax at the clinic. Possible Solutions 1 . Use abstract segregation of duties including superscript vendor accommodate responsibilities. 2. Limit access to the master vendor file and require dual approvals before a new vendor is added to the master vendor file. 3. Do some sort of confirmation of new vendors, checking TIN and phone numbers to ensure you are not dealing with a phony vendor. Get W-as from every new vendor before making the first payment. Run W-as against the IRS TIN (Taxpayer Identification Number) matching Program before making the first payment.Check to e If duplicate vendors drop the same TIN. Conclusion While very few organizations will employ all the practices described above, the more a corporation Incorporates Into their form _or_ system of government and procedures, the more difficult It Is for a fraudster (either an employee, former employee or someone else) to steal from the company. The point Suburb Free Clinic Internal Control Case Study By Saying-Chou Saying Chou According to published reports, what happened at Height Suburb Free Clinic is typical of the types of employee fraud that happens day in and day out at many organizations.It was nothing overly sophisticated and demonstrated how insiders own enrichment. A former SCOFF of the clinic took advantage his knowledge that money is supposed to go directly to a federal office. However at the free clinic, similar to the federal office. For over two years he had clinic workers return these checks, which he deposited into this account that he actually owned. He allegedly set 1 . Use appropriate segregation of duties including master vendor file responsibilities. See if duplicate vendors have the same TIN. A corporation incorporates into their policy and procedures, the more difficult it is for