Fraud investigator offers advice to Garfield County officials
Embezzlers are most likely to be caught if they know they’re being closely watched, and most commonly are detected by a tip from a co-worker or someone else in the know, according to a fraud forensics expert who gave a presentation this week to Garfield County commissioners and other county officials.
Setting up a fraud hot line within county government was just one of several recommendations offered by Douglas Cash, a private fraud examiner and manager of EideBailly forensic accounting services in Denver.
Other safeguards include conducting a risk assessment, strengthening internal controls, establishing strong whistle-blower and enforcement policies, providing fraud awareness education and hiring an internal auditor, said Cash. He was called in to offer advice after two recent embezzlement cases in the Garfield County Clerk and Recorder’s Office.
An anonymous tip line or other mechanism for a co-worker, relative or acquaintance of the suspected perpetrator can be one of the easiest, most effective and least expensive measures to implement, he said.
Even if fraud is suspected, whether it’s in a private business or government office, “A lot of people don’t like confrontation, and won’t ask those kinds of questions,” Cash said.
“People rarely commit fraud if they think they will be caught,” he also said, adding that the “perception of detection” is the most effective way to deter fraud in any organization.
If someone thinks they can get away with it, even the most trusted employee can try to justify it, Cash said.
Any kind of personal or work-related pressures, such as financial troubles, gambling or drug problems, job dissatisfaction or even the “challenge to beat the system” can lead someone to steal from their employer, he said.
“It’s amazing what people will tell themselves, and what they will tell each other” to justify theft, he said.
If a supervisor is aware of or recognizes that an employee is having those kinds of problems, that’s the time to take action, Cash said, “by taking as many opportunities away as possible.”
Requiring employees to take vacation time can also go a long way to relieve work pressures that might lead someone to steal, he said.
The most recent public embezzlement case in Garfield County involved former clerk’s office worker Robin McMillan, who was fired in August on accusations that she stole close to $200,000 from the office over the past five years. She now faces felony theft charges.
It was the second case of theft from the county clerk’s office in recent years, following the conviction of former clerk’s worker Brenda Caywood on theft charges in 2012.
Following the most recent incident, Garfield Clerk and Recorder Jean Alberico and county Finance Director Ann Driggers brought in an outside accounting consultant to review the internal process of that and other county offices.
“We are now setting up a method of doing an internal audit on a monthly basis to make sure everything is where it’s supposed to be,” she told county commissioners at the Tuesday meeting.
The county also may act on Cash’s recommendation regarding a telephone or email tip line where any concerns could be reported, anonymously if need be.
“Sometime you will have people just blowing off steam or making baseless claim, but other (tips) do require attention,” County Manager Andrew Gorgey said. “I don’t see a downside to have a hot line for this.
“I am concerned, and these are things that we need to address actively … there is room for improvement,” Gorgey said.
The county’s regular contract financial auditor, Paul Backes, also attended the meeting. He said he can include a review of internal controls within county departments as part of his annual audit, but advised against the county hiring its own internal auditor.
“Cost-benefit is the issue,” he said. “You have to keep it in context. You don’t want to spend $100,000 looking for $80,000.”
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