Larry’s Laws of Larceny- Law 14: Your Online Bank Statement may not be Adequate

Larry Beebe, CPA

Many organizations have gone paperless. As a part of going paperless, many organizations get bank statements online. The problem with an online bank statement is that the organization may shortcut the process by not getting copied of their cancelled checks.

A fraudster in an employee benefit plan was aware that the organization never saw copies of its cancelled checks. He was able to have checks drawn to dormant participants in a vacation plan. These were participants who had not withdrawn their accumulated balance in a number of years. He then substituted his own name on the payee line on the checks and cashed the checks.

The fraudster in this story was allowed too much authority within the fund. Adequate separation of duties would have prevented this fraud.

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