A former Northumberland Borough, Pa. council president is facing felony-theft charges involving US $18,722 allegedly stolen from the borough over a 10-year period, according to The Daily Item. The charges relate to alleged misuse of the borough’s credit card and fraudulent acceptance of reimbursement checks all involving nonexistent computer software. A part-time borough clerk discovered numerous credit card purchases for software that could not be found on any of the borough’s computers or on its property. According to the borough’s secretary and treasurer, the former council president also periodically directed her to issue reimbursement checks for software purchases to him, which they both signed. The president is one of four borough officials authorized to sign checks.

The former council president also faces charges in alleged software thefts in excess of US $100,000 from his former employer, a privately owned manufacturing company, where he was a computer and Web developer until he was fired in September 2007.

Lessons Learned

Good preventative and detective controls can act as a deterrent by reducing the likelihood of fraud as well as helping internal auditors quickly discover any fraudulent acts. In this case, controls should have been in place to prevent:

  • Persons ordering the goods from certifying the receipt of those goods.
  • Issuing payments without adequate documentation to support receipt of goods.
  • Persons from authorizing payment (e.g., signing the check) for which they are the payee.
  • Hiring persons without performing a reference and background check.
  • The absence of an independent audit. (The former council president’s deception lasted 10 years!

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