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The patient embezzler: nonexistent segregation of duties and unlimited access to cash entice a long-time employee to raid the company's coffers.

Article Excerpt
NINA, A CASHIER AT AN INDONESIAN automotive dealership, handled the cash management system at one of the dealership's branch offices. The system recognized and differentiated between two types of cash flows--bank transactions and cash transactions--and was set up to receive credit card payments that were recorded as bank transactions. When a customer paid with a credit card, the bank charged the company a merchant fee for the transaction. This fee averaged about 3 percent of the total payment and was deducted directly from the amount of the payment deposited; thus, only the net amount of the deposit appeared on the bank statement.

Nina received the bank statement printout daily, so she was aware of every credit card payment transferred into the branch's bank account. A few days after each transaction, when the payment had cleared the bank, she would record the net payment received in the system by crediting accounts receivable and debiting the bank account, leaving the balance in accounts receivable equal to the amount of the bank charge. To zero out the residual amount, Nina would periodically record a bank transaction labeled as "credit card charge" for the amount of the total credit card charge.

Nina was also responsible for the monthly cash bank reconciliation. She prepared the reconciliation under the branch finance manager's supervision, with additional oversight from the accounting officer at the company's head office. Because Nina recorded...