Chapter 14 Cash Control and Banking; Cashier Embezzled over $600k in Public Funds

http://www.komonews.com/news/local/85298802.html

Summary:
In Port Angeles, Washington, Catherine Betts was arrested after being charged for an embezzlement of "more than $600,000 in public funds, according to a report by the state Auditor's Office." Catherine Betts was the former cashier of the Clallam County Treasurer's Office and may be charged for first-degree theft, which includes a $20,000 fine and ten years in jail for "manipulating transactions." It is asid that the actual embezzlement amount could possibly be more by over one hundred thousand dollars, but much of the source documents and records such as daily reconciliations could not be found. Furthermore, it has been claimed by a report of the state Auditor's Office that the theft began from February 2004 to May 2009. When the investigation began in May 2009, she was put on administrative leave and eventually terminated. It was only until the allegation begam that lwas were reinforced into the system of the Treasury Office to prevent any other theft.

Connection:
The article relates to Chapter 14 in the text book because it is about internal control. In this case, the internal control is poorly constructed. When involving the financial affairs of a state county, internal countrol is necessary. Catherine Betts was a trustee and account holder who was given fiduciary responsibility to "process real estate taxes, deposits and tax affidavits," and moer. A rule that determines good internal control includes having two people processing and preparing documents that are independent of each other and should agree. Another rule of internal control is that one person should not handle physical assets of accounting records (in this case, public funds). However, the Treasurer's Office has one person controlling the documents and handling both public funds and records. The county's Treasurer Office lacks good internal control.

Reflection:
I am surprised to see that the county's Treasury Office lacks good control, and that the treasurer was able to let this happen. The treasurer should have either had a close watch on the cashier (who is given responsibility to be in charge of private documents and assets of the county) or made more laws regarding who controls the documents and assets of the Office. Instead, the actions of providing good internal control occur after the problem has occurred. The Treasurer should have made more procedures regarding the security of the funds and have the cashier monitored on occasion.