Fiona Fraud has been working as a secretary for the School of Nursing at College Town University for nearly fifteen years. She has a reputation for being friendly and approachable, and is generally good at what she does. In addition to her secretarial responsibilities, Fiona is also tasked with arranging catering and entertainment for all of the events that the School of Nursing puts on each year when their newest group of graduates is matriculating. It is easier to let Fiona have full control of the graduation events, as to split up the task between several employees would make things more complicated for everyone involved. That is what Fiona has told her superiors, and they have no reason not to believe her or to think of her as a potential fraud risk – or so they think.
Fiona has credit accounts with several various vendors and party stores, and also has company credit cards with several local department stores and chain stores. Whenever invoices arrive from the vendors, party stores and department stores, Fiona hands the receipts over to the accounting and billing department, who then ensure that the amounts on the receipts match up to the amount that appears on the bill. So far there has never been a discrepancy between any of the bills and the receipts.
The problem is that no one is examining the receipts other than those in the accounting and billing department and those who work within that department do not know how much Fiona is supposed to be spending. Because the amounts that Fiona spends are about the same each year, the company has no clue that Fiona purchases her entire summer wardrobe on the company’s dime each year and that she also buys her Christmas presents for the next winter by using the company credit cards in the spring. The company does not realize the risk they are taking by entrusting Fiona with the cards and has no idea of the large scale fraud she has been perpetrating for over a decade.
The School of Nursing can prevent such fraud from occurring by establishing a purchase order system where a supervisor must be notified before Fiona goes on her yearly shopping trips to gather supplies for the graduation celebrations. Such a system can involve various components like requiring that Fiona fill out a preprinted purchase order slip, and then placing a call notifying the stores that Fiona travels to that there must be a preprinted purchase order or that the store will not receive the funds for the purchases.
If Fiona’s supervisors are in on the fraud (for example, Fiona may be shopping for them as well), things may become more complicated. Having more than one person sign off on any purchase order is a great way to further minimize risk and prevent Fiona from being able to perpetrate the fraud. The more safeguards are in place and the more people who are aware of each time Fiona will be using the company’s funds to pay for purchases the less likely it is that she will be able to continue her behavior undetected. Purchase order software has many safeguards built in that prevent someone like Fiona from perpetrating fraud upon your company.