control, and governance
TAKING THE TRANSIT AUTHORITY FOR A RIDE
The Sun Chronicle (Attleboro, Mass.) reports that a former employee of a Massachusetts Bay Transportation Authority (MBTA) subcontractor — which manufactured MBTA passes — was sentenced to three years in prison for selling millions of dollars worth of illegal monthly passes. Prosecutors say the man made more than 20,000 passes worth about US $4 million, which he and two accomplices sold through Craigslist. The scheme unraveled after a commuter rail conductor reported an unusual-looking pass.
This case highlights several fraud-related issues and potential mitigation strategies that internal auditors should consider in their day-to-day work. Public transit is an important public service, frequently subsidized by taxpayers, and this type of fraudulent activity can undermine taxpayer confidence in the efficiency and effectiveness of services provided to the public.
While it is commendable that a commuter rail conductor spotted an illegal transit pass, the problem likely could have been identified and addressed sooner. MBTA or its subcontractor may not have established effective controls to prevent or detect fraudulent activities by employees.
Internal auditors are well-positioned to ask and act upon the answers to key questions that could prevent similar crimes from occurring, including:
No doubt, internal auditors could think of other equally useful ways to prevent and address this kind of fraudulent activity.
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