nsaa/nsac joint middle management conference fraud – an iowa case study presented by david vaudt...
TRANSCRIPT
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NSAA/NSAC Joint Middle Management Conference
Fraud – An Iowa Case Study
Presented by
David Vaudt Tami Kusian
Auditor of State Deputy – Performance Investigation Division
April 16, 2007
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Presentation Objectives
Fraud – Webster’s definition A stroll down “memory lane” CIETC – one of Iowa’s most publicized frauds A historical look at government fraud in Iowa Interesting Iowa government fraud cases Today’s fraud environment Question and answer session
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Webster’s Dictionary
Fraud: deceit; trickery; cheating (law – intentional deception to cause a person to give up property or some lawful right) something said or done to deceive; trick; artifice a person who deceives or who is not he or she pretends to be; imposter; cheat
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44
Webster’s Dictionary
Deceive: to make (a person) believe what is not true;
mislead implies deliberate misrepresentation of facts by
words, actions, etc., generally to further one’s
ends
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There are two significant types of financial fraud . . .
Misappropriation of assets (aka employee fraud)
— higher number of cases
— lower dollar impact
Fraudulent financial reporting (aka management fraud)
— lower number of cases
— higher dollar impact
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66
For decades, members of
the CPA profession labored
in boring anonymity . . .
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Then, in 2001, everything
changed, and we became . . .
famous.
Well, sort of . . .
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88
Most of the recent high-profile
cases have been management
fraud cases . . .
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Let’s take a quick
stroll down recent
memory lane . . .
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[12/5/01][12/5/01]
After Enron, New After Enron, New Doubts About AuditorsDoubts About Auditors
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1111
[12/5/01][12/5/01]
Trust and DiscretionTrust and Discretion “ “CPAs must never forget that the 'P' in CPAs must never forget that the 'P' in
'CPA' stands for public -- serving the 'CPA' stands for public -- serving the public and maintaining their trust,” public and maintaining their trust,” former SEC chief accountant Turner former SEC chief accountant Turner
said.said.
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Andrew Fastow, (former) Enron CFO
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Ben Glisan, Jr., (former) Enron Treasurer
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Scott Sullivan, (former) WorldCom CFO
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David Meyers, (former) WorldCom Controller
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[3/16/02][3/16/02]
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Then the local media focus changed to our own backyard – one of Iowa’s most publicized frauds in many years . . .
Central Iowa Employment & Training Consortium (CIETC) became a household name across Iowa . . .
Within hours of the release of our report on March 31, 2006 the media had labeled it the “CIETC Salary Scandal”
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2020
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2323
Central Iowa Employment andTraining Consortium (CIETC)
What led to the special investigation?
— Iowa Workforce Development (IWD) employee concerned about year-end $300,000 award to CIETC (“messenger” was employee’s supervisor)
— Three months later, additional concerns identified by same employee – CIETC salaries and IWD management override
Obstacles faced:
— IWD Deputy Director interference with investigation — Inconsistent signatures on CIETC documents— Whistle-blower’s “messenger”
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2424
Central Iowa Employment and
Training Consortium (CIETC)(Continued) Approach used:
— Review of IWD award process
— Review of CIETC allocation of costs to Federal grants
— Compilation of CIETC management salaries and supplemental payments
Time period covered:
— 2 years, 6 months
— Records for previous periods not readily available
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2525
Central Iowa Employment and
Training Consortium (CIETC)(Continued) Findings:
— Improper allocation of administrative salaries and supplemental payments
— “Less than arm’s length transactions”
— Excessive compensation:
• CEO - $795,000
• COO - $768,000
• CFO - $292,000
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2626
Central Iowa Employment and
Training Consortium (CIETC)(Continued) Results:
— Government Oversight Committee hearings - media frenzy— U.S. Attorney (with FBI, AOS, and others assisting) takes over investigation— CIETC CEO, CFO, and Board Chair each indicted on 19 to 27 counts— IWD Deputy Director indicted on 2 counts - conspiracy and obstruction— CIETC COO pleads guilty to 2 counts and agrees to repay up to $400,000 and serve up to 4 years in prison
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CIETC Wave Crashes: 4 CIETC Wave Crashes: 4 IndictedIndicted
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2828
Ex-CIETC exec pleads guilty of fraud
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2929
Des Moines Register HeadlineMarch 27, 2007
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The “CIETC Salary Scandal” caused us to reflect on AOS’s more recent fraud investigations . . .
Yes, regretfully other fraud exists even here in Iowa – the Heartland of America
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3131
Fraud Investigation Reports Issued By Firm Fraud Investigation Reports Issued By Firm Fiscal Years 1996 through 2007*Fiscal Years 1996 through 2007*
0
10
20
30
40
50
60
70
80
AOS CPA Firm I nternal Audit
77
7
22
*2007 – first 9 months
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3232
Fraud Investigation Reports Issued by Fiscal Fraud Investigation Reports Issued by Fiscal YearYear
Fiscal Years 1996 through 2007*Fiscal Years 1996 through 2007*
0
5
10
15
20
9 Mos.-
2007
2006 2005 2004 2003 2002 2001 2000 1999-96
11
16
20
1011
6
11
14
7
*2007 – first 9 months
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3333
Fraud Investigation Reports Issued by Entity TypeFraud Investigation Reports Issued by Entity TypeFiscal Years 1996 through 2007*Fiscal Years 1996 through 2007*
0
5
10
15
20
25
30
35
40
School County City 28E
Organizations
State Agencies Non-Profi t Other
22
26
37
8 8
3 2
*2007 – first 9 months
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3434
Fraud Investigation Reports Issued by Dollar Fraud Investigation Reports Issued by Dollar AmountAmount
Fiscal Years 1996 through 2007*Fiscal Years 1996 through 2007*
0
5
10
15
20
25
30
35
40
500-999 250-499 100-249 75-99 50-74 25-49 10-24 0-9
Dollars in thousands
3 4
10
6
1013
23
37
*2007 – first 9 months
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3535
Methods Used to Carryout Frauds
57% - undeposited collections
38% - improper purchases with vendors
28% - payroll/extra pay
17% - improper travel reimbursements
17% - improper credit card payments or purchases
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3636
Other Fraud Related Observations
7 issued reports had gambling as a factor
Of 37 reports issued on Cities – 3 were Police Departments
Of 26 reports issued on Counties – 5 were Sheriff Offices and 4 were Mental Health Departments
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3737
Cedar County Economic Development Commission
(CCEDCO) What led to the special investigation?
— Telephone call from bank regarding a dishonored check on CCEDCO’s account
— After review of bank statement, requested AOS conduct an investigation
Obstacles faced:
— Lack of supporting documentation
— Additional records and support obtained from vendors and by subpoena
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3838
Cedar County Economic Development Commission (CCEDCO)
(Continued)
Approach used:
— Reviewed all activity in CCEDCO’s bank accounts
— Reviewed disbursements for support and approval
— Examined purchases made with CCEDCO’s credit card
Time period covered:
— 5 years, 2 months
— Time period Office Assistant was employed
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3939
Cedar County Economic Development Commission
(CCEDCO) (Continued) Findings:
— $72,400 of improper disbursements including
• Over $20,000 in extra payroll payments
• $23,000 in improper reimbursements
• $15,000 in improper charges on CCEDCO credit card
— $300 cash withheld from deposit Results:
— Sentenced to 10 years— Ordered to pay restitution of $67,000
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4040
City of Garnavillo
What led to the special investigation?
— Required financial audit, once every four years— CPA testwork identified $5,000 variance in City Clerk’s financial report
Obstacles faced:
— City Clerk asked to return, while placed on leave, to prepare payroll; subsequently, discovered various computer files deleted and several boxes of records missing — Inadequate utility and receipts records— Payees per accounting records not same as cancelled checks
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4141
City of Garnavillo(Continued)
Approach used:
— Review of City’s unauthorized credit card statements
— Review of City’s cancelled checks:• payments on City Clerk’s personal credit cards• purchases of unauthorized office supplies
— Subpoena of personal credit card statements
Time period covered:
— 4 years, 6 months
— City Clerk employed almost 20 years; not cost beneficial to investigate previous 15 years
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4242
City of Garnavillo(Continued)
Findings:
— Unauthorized City credit cards:• 131 cash advances totaling $51,000 (at or near gaming facilities)• 143 purchases for non-City items totaling $12,000
— $16,000 of payments on personal credit cards— $3,000 of unauthorized purchases of office supplies and other items
Results:
— City Clerk sentenced to 10 years— City Clerk ordered to pay restitution of $13,000 (amount not covered by insurance)
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4343
City of Pleasant Plain
What led to the special investigation?
— Nearby City Clerk received bank statements in error
— Notified Pleasant Plain City Council
Obstacles faced:
— Lack of supporting documentation
— Additional records obtained by search warrant, vendors and subpoena
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4444
City of Pleasant Plain(Continued)
Approach used:
— Reviewed all activity in City bank accounts— Obtained invoices or other support from selected vendors— Examined waste management billings and collection records
Time period covered:
— 2 years, 5 months— Time period City Clerk was employed
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4545
City of Pleasant Plain(Continued)
Findings:
— $60,300 of improper disbursements
— Included $42,000 of checks to City Clerk and $7,300 in checks payable to cash
— $4,560 of undeposited collections
Results:
— Charges filed by County Attorney— Pending trial
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4646
City of Hastings
What led to the special investigation?
— Vendor inquiry to Mayor regarding payment for maintenance of City streets— Mayor contacted bank and found cash balance significantly less than City Treasurer recently reported
Obstacles faced:
— No reconciliations of City records to bank balances— Insufficient records for utility billings and receipts— Insufficient records for earlier years of City Treasurer’s employment
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4747
City of Hastings(Continued)
Approach used:
— County Sheriff seized records through search warrant of City Treasurer’s home
— Confirmation of payments to City by Stateand County
— Review of City’s bank statements, cancelled checks, money orders, etc.
Time period covered:
— 5 years
— Not possible to investigate previous 10 years; inadequate records
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4848
City of Hastings(Continued)
Findings:
— $32,000 of undeposited receipts – 75 instances
— $84,000 of cash withdrawals and money orders – 134 instances
Results:
— Sentenced to 10 years— Served 5 months, placed on 5 years probation
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4949
City of Sergeant Bluff
What led to the special investigation?
— Assistant City Clerk identified undeposited collections for utilities
— Mayor contacted AOS and DCI
Obstacles faced:
— Some records not available
— City Clerk was able to override controls
— Financial auditors told reconciliations were not performed
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5050
City of Sergeant Bluff(Continued)
Approach used:
— Compared utility deposits per bank to monthly reconciliations and customer accounts
Time period covered:
— 3 years, plus 1 year of partial records
— City Clerk for 21 years, prior records not available
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5151
City of Sergeant Bluff(Continued)
Findings:
— Over $231,000 withheld from City’s deposits of utility collections for a 3 year period
— An additional $67, 000 of undeposited collections estimated for a previous year — Auditors were told reconciliations were not performed
Results:
— Sentenced to 10 years — Ordered to pay restitution of $25,000
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5252
Dallas County Sheriff’s Office
What led to the special investigation?
— Interstate traffic stop for tinted windows violation
— Hidden compartments in vehicle with $900,000 cash
— $120,000 cash allegedly “disappeared”
Obstacles faced:
— Office atmosphere
— Missing case files
— Difficult evidence trail
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5353
Dallas County Sheriff’s Office
(Continued)
Approach used:
— Inventory of Property and Evidence Room
— Evidence log sheets and case files review
— Subpoena of personal bank information
Time period covered:
— April 2006 inventory
— Inventoried evidence involved cases generated over 4 years, 6 months
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5454
Dallas County Sheriff’s Office
(Continued) Findings:
— $61,000 unaccounted for cash— Missing seized weapons, jewelry, and other property— Controlled substances variations— Unusual personal cash deposits and cash purchases— “Disclaimed” property seizure
Results:— Attorney General initiated elected official removal from office process— Sheriff subsequently resigned— Trial scheduled for 2007 for alledged $120,000 cash disappearance
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5555
Linn County Facilities Management Department
What led to the special investigation?
— County Auditor was alerted to concerns by anonymous phone call
— DCI investigated allegations
— County requested AOS to perform investigation
Obstacles faced:
— Collusion between Facilities Manager and Vendor
— Records available for 3 most recent fiscal years only
— Additional records not available from vendor
![Page 56: NSAA/NSAC Joint Middle Management Conference Fraud – An Iowa Case Study Presented by David Vaudt Tami Kusian Auditor of State Deputy – Performance Investigation](https://reader035.vdocuments.site/reader035/viewer/2022070305/5514da6a55034693478b5438/html5/thumbnails/56.jpg)
5656
Linn County Facilities Management Department
(Continued) Approach used:
— Compared actual expenditures to budget
— Verified existence of vendors receiving payments from Department
— Examined disbursements to certain vendors to determine if goods and services were received.
— Examined copies of redeemed warrants
— Interviewed staff about work done by vendors
Time period covered:
— Approximately 3 years, 7 months
![Page 57: NSAA/NSAC Joint Middle Management Conference Fraud – An Iowa Case Study Presented by David Vaudt Tami Kusian Auditor of State Deputy – Performance Investigation](https://reader035.vdocuments.site/reader035/viewer/2022070305/5514da6a55034693478b5438/html5/thumbnails/57.jpg)
5757
Linn County Facilities Management Department
(Continued) Findings:
— Over $183,000 of improper disbursements
— Majority of these disbursements were to one vendor for goods and services the County did not receive
— Construction supplies recovered from Facilities Manager’s home – home remodel
Results:— Facility Manager sentenced to 10 years for theft and 5 years for misconduct – granted parole— Contractor pled guilty, sentenced to 5 years probation— $20,000 restitution each (insurance deductible and audit costs)
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5858
Cass County Sheriff
What led to the special investigation?
— County officials concerns about Sheriff’s office
• Cash accounts• Vehicle purchases and sales• Weapon purchase
Obstacles faced:
— Office atmosphere— Lack of records— Newspaper special investigation series on “ticket fixing,” Cass County implicated
![Page 59: NSAA/NSAC Joint Middle Management Conference Fraud – An Iowa Case Study Presented by David Vaudt Tami Kusian Auditor of State Deputy – Performance Investigation](https://reader035.vdocuments.site/reader035/viewer/2022070305/5514da6a55034693478b5438/html5/thumbnails/59.jpg)
5959
Cass County Sheriff(Continued)
Approach used:
— Confirmation of State payments and County Clerk of Court payments to Sheriff’s Office
— Cash accounts disbursement vouching
— Review of court orders and case records on restitutions and/or donations
Time period covered:
— 2 years, 8 months
— Sheriff for 22 years; not cost beneficial to investigate prior years
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6060
Cass County Sheriff(Continued)
Findings:— $11,000 improper and unsupported disbursements— $3,000 undeposited collections— County Attorney reissued citations for lesser offense – in return for donations to Sheriff’s Office— County Attorney had Sheriff’s Office vehicle and several weapons
Results:— Citizens filed petition for elected officials’ removal from office – bond posted by citizens— County Sheriff and County Attorney removed from office by District Court
![Page 61: NSAA/NSAC Joint Middle Management Conference Fraud – An Iowa Case Study Presented by David Vaudt Tami Kusian Auditor of State Deputy – Performance Investigation](https://reader035.vdocuments.site/reader035/viewer/2022070305/5514da6a55034693478b5438/html5/thumbnails/61.jpg)
6161
Lee County Protective Payee Program
What led to the special investigation?
— Concerns with endorsements identified during our annual audit of County
— Conducted investigation, with assistance from DCI
Obstacles faced:
— Some bank statements and redeemed checks not available, some obtained from bank through subpoena
— Supporting documentation for disbursements from client accounts not available
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6262
Lee County Protective Payee Program(Continued)
Approach used:
— Examined selected bank activity for Client accounts, identified unusual activity
— Examined client files and check registers
— Examined personal bank statements and credit card statements for former Payee Clerk
Time period covered:
— 3 years, 5 months
— Consisted of time period Payee Clerk was employed in this position
![Page 63: NSAA/NSAC Joint Middle Management Conference Fraud – An Iowa Case Study Presented by David Vaudt Tami Kusian Auditor of State Deputy – Performance Investigation](https://reader035.vdocuments.site/reader035/viewer/2022070305/5514da6a55034693478b5438/html5/thumbnails/63.jpg)
6363
Lee County Protective Payee Program(Continued)
Findings:
— $60,500 of improper disbursements, including:
• Over $28,000 in checks to cash, bank and clients• Over $26,000 in payments to personal
credit cards
— $1,800 of cash withheld from deposits
Results:
— Sentenced to 10 years — Ordered to pay restitution of $76,000
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6464
Mills County Treasurer’s Office What led to the special investigation?
— Deputy Treasurer assisted the Auto Department with payment collections— Cash deposit at end of day unreasonable versus cash activity processed by Deputy Treasurer
Obstacles faced:
— Tax exempt coding input for taxable vehicle transactions — Computer user profile used by more than one County employee— Insufficient records to investigate previous years
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6565
Mills County Treasurer’s Office(Continued)
Approach used:
— Review of State’s computerized information for same vehicle title transactions
— Review of supporting documentation obtained from auto dealers initiating vehicle transactions
— Subpoena of personal bank statements of County employee
Time period covered:
— 2 years; 1 month — Not possible to investigate previous 9 years; inadequate records
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6666
Mills County Treasurer's Office(Continued)
Findings:
— $118,000 for 114 undeposited vehicle title transactions
— County employee had: • $111,000 of cash deposits to personal
bank accounts• $4,600 of cash payments on personal loans
Results:
— Sentenced to 42 years (all suspended) — Ordered to pay restitution of $130,000
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6767
Taylor County Sanitarian’s Office
What led to the special investigation?
— Copy of a claim was faxed to the County Auditor by Banker
— Determined to be a fraudulent claim
— County officials requested AOS conduct an investigation
Obstacles faced:
— Insufficient records for collections
— Little oversight of County Sanitarian
— Determination of actual hours worked and travel incurred by the County Sanitarian
![Page 68: NSAA/NSAC Joint Middle Management Conference Fraud – An Iowa Case Study Presented by David Vaudt Tami Kusian Auditor of State Deputy – Performance Investigation](https://reader035.vdocuments.site/reader035/viewer/2022070305/5514da6a55034693478b5438/html5/thumbnails/68.jpg)
6868
Taylor County Sanitarian’s Office(Continued)
Approach used:
— Examined disbursements, including payroll and travel reimbursements
— Verified collections were deposited— Reviewed personal bank activity of County Sanitarian. — Reviewed gaming records from player card subpoenaed from gambling facilities
Time period covered:
— 1 year, 5 months— Time period County Sanitarian was employed
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6969
Taylor County Sanitarian’s Office(Continued)
Findings:
— $15,700 of undeposited collections - $11,600 from the State
— Over $4,000 of improper and unsupported disbursements, including salary and reimbursements
— Reimbursements included meetings which did not occur or she did not attend.
— Work time at gaming facilities
Results:
— Sentenced to 5 years probation and 250 hours of community service— Ordered to pay restitution of $27,000
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7070
Boone Community School District
What led to the special investigation?
— Business manager terminated for inappropriate use of District computer equipment
— Discovered folder of check stubs to questionable payees
Obstacles faced:
— Improper manual checks not recorded in accounting system
— Check payee did not match accounting records
— Insufficient bank and other supporting documents on certain checks
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7171
Boone Community School District(Continued)
Approach used:
— Review of check images obtained from bank
— Subpoena of Business Manager’s personal bank account statements
— Confirmation of payments to District by State and County
Time period covered:
— 4 years, 5 months
— No improper disbursements concerns in first 4 years of Business Manager’s employment
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7272
Boone Community School District(Continued)
Findings:
— 46 improper checks to the Business Manager for $140,000
— 76 improper checks to District’s bank, all redeemed for cash totaling $40,000
— 51 improper checks to the District, all redeemed for cash totaling $27,000
Results:
— Sentenced to 10 years— Ordered to pay restitution of $3,000
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7373
Grundy Center Community School District What led to the special investigation?
— Business Manager suspended amid concerns with job performance
— Subsequently identified concerns with disbursements
— District officials requested AOS to conduct investigation
Obstacles faced:
— Insufficient records for collections
— Additional records obtained from vendors and subpoenas to banks
— Payee per listing provided to Board not same as cancelled checks
![Page 74: NSAA/NSAC Joint Middle Management Conference Fraud – An Iowa Case Study Presented by David Vaudt Tami Kusian Auditor of State Deputy – Performance Investigation](https://reader035.vdocuments.site/reader035/viewer/2022070305/5514da6a55034693478b5438/html5/thumbnails/74.jpg)
7474
Grundy Center Community School District(Continued)
Approach used:
— Examined selected disbursements for approval and support
— Reviewed activity on District charge accounts and bank statements
— Reviewed payments on personal credit cards of Business Manager
Time period covered:
— 3 years, 3 months
— Time period Business Manger was employed
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7575
Grundy Center Community School District(Continued)
Findings:
— $60,000 of improper and unsupported disbursements including
• Checks to Business Manager of over $15,000
• Payments on personal credit cards of $24,000
• Unauthorized purchases on District credit card of $12,000
Results:
— Sentenced to 10 years, suspended to 2-5 years — Ordered to pay restitution of $26,000
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7676
Before and After School Services (BASS)
What led to the special investigation?
— Anonymous letter to County Attorney
— City Police Department representative reviewed records and identified payments for personal expenses
Obstacles faced:
— Dual regulations – Department of Human Services and Internal Revenue Code
— Insufficient records
![Page 77: NSAA/NSAC Joint Middle Management Conference Fraud – An Iowa Case Study Presented by David Vaudt Tami Kusian Auditor of State Deputy – Performance Investigation](https://reader035.vdocuments.site/reader035/viewer/2022070305/5514da6a55034693478b5438/html5/thumbnails/77.jpg)
7777
Before and After School Services (BASS)(Continued)
Approach used:
— Checking account disbursements vouching
— Confirmation of payments to BASS by the State
— Subpoena of personal bank account and credit card statements
Time period covered:
— 4 years, 6 months
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7878
Before and After School Services (BASS)(Continued)
Findings:
— 3 family members comprise Board of Directors— $420,000 improper/unsupported disbursements
• “Ownership draws” - $160,000• Personal credit card payments - $78,000• Chevy Avalanche - $30,000• Mother’s grant writing - $30,000• “Benefit,” Cancun vacation with 15 family members - $24,000• “Loan” repayments to family members – $39,000
Results:— Charges filed, trial pending
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7979
Department of Human Services (DHS)
What led to the special investigation?
— An employee identified a payment for child care services to a family member of an Accounting Tech
— Claim was not authorized and had a fraudulent invoice
Obstacles faced:
— None, necessary records available
— Personal bank information obtained by subpoena
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8080
Department of Human Services (DHS)
(Continued) Approach used:
— Reviewed procedures performed by DHS
— Reviewed child care assistance payments
— Compared payments to approved providers
Time period covered:
— Approximately 10 months
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8181
Department of Human Services (DHS)
(Continued) Findings:
— $18,750 of improper disbursements for child care services not performed
• 5 payments were made from fraudulent invoices
• Payee was family member of employee, services in 5 different counties
Results:
— Employee placed on administrative leave, then resigned
— DHS recovered over $17,300 from IPERS, last salary payment and vacation pay out
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8282
Iowa State University (ISU)
What led to the special investigation?
— Alert ISU employee reviewing vendor invoices
Obstacles faced:
— None, vendor voluntarily provided requested payroll records
— Additional records obtained by search warrant
![Page 83: NSAA/NSAC Joint Middle Management Conference Fraud – An Iowa Case Study Presented by David Vaudt Tami Kusian Auditor of State Deputy – Performance Investigation](https://reader035.vdocuments.site/reader035/viewer/2022070305/5514da6a55034693478b5438/html5/thumbnails/83.jpg)
8383
Iowa State University (ISU)(Continued)
Approach used:
— Complete review of vendor’s invoices
— ISU internal audit compiled information
— Attorney General requested AOS involvement
Time period covered:
— 2 years, 9 months
— Not cost beneficial to investigate previous 3-year contract period
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8484
Iowa State University (ISU)(Continued)
Findings:
— $403,000 (15,700 hours) over-billings paid
— Additional $29,000 (1,100 hours) over- billings not yet paid
Results:
— Suspended sentence of 25 years and 5 years probation
— Ordered to pay restitution of $297,000
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8585
Fraud Environment Today
Number of issues/concerns on the rise
— Nationally – from Enron of 2001 to the SEC stock option cases today
— In Iowa: • 11 reports issued in first 9 months of 2007• 24 investigations in progress or pending• FY2007 - 75% increase over previous high of 20 in 2005
Why? The “CIETC Salary Scandal” impact
Challenges? — Resources to investigate timely— Funding
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8686
Bottom Line on Fraud
Fraud exists – yes, even in your own
organizationor the organizations you audit.
Without a doubt, virtually every organization
experiences fraud and abuse of some type – it
can range from minor employee misuse of office
supplies to significant fraudulent financial
reporting.
![Page 87: NSAA/NSAC Joint Middle Management Conference Fraud – An Iowa Case Study Presented by David Vaudt Tami Kusian Auditor of State Deputy – Performance Investigation](https://reader035.vdocuments.site/reader035/viewer/2022070305/5514da6a55034693478b5438/html5/thumbnails/87.jpg)
8787
The Most Frequently Asked Question Since The “CIETC
Salary Scandal”
How do we prevent something like
CIETC from ever happening again?
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8888
Responses to Fraud
Nationally by the profession – SAS 99
Locally by AOS:
— to help prevent fraud – re-examine audit requirements
— to better detect fraud in audits: • SAS 99 training• effective interviews• red flag alerts
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8989
Biggest Fraud Inhibitors
Effective internal controls:— cost/benefit relationship— integrity of employees
Appropriate governing board oversight:— Absolutely critical in small organizations— Equally effective in large organizations when they ask the tough questions
Trust . . ., but verify!
In God we trust,everyone else we audit!
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9090
Questions