“But I intended to pay it all back, I really did,” Joseph Swankie said as he talked to his manager. How did I ever get into this situation, he thought.
Two years ago, Joe received the promotion for which he had been working so hard for. In addition, Joe’s new manager told him that Joe had a very promising future at the company. Joe and his wife Janae quickly purchased a new home. Not long after, Joe and Janae had their fourth child, and life was great. After having their fourth child, Janae quit work to spend more time with her kids.
Suddenly, things started to turn upside down. The economy took a downturn and had a negative impact on Joe’s company. His pay, which was based on commission, was reduced nearly 50 percent. Joe still worked hard but thought he should be paid more. Unable to find another job, Joe resentfully decided he would stay with the company even with the lower pay.
Not long after he started receiving lower commissions, Joe noticed that the controls over the petty cash fund weren’t very strong. The records were not reviewed very often, and small shortages were usually written off. One week, Joe took $50. When questioned by his wife, Joe said he had found a few odd jobs after work. Joe continued this habit of taking small amounts for a couple of weeks. After realizing that no one had noticed the shortage, he started to take up to $100 a week.
One day, another employee noticed Joe taking some cash from the fund and putting it in his wallet. When questioned, he simply stated that it was a reimbursement the company owed him for supplies. An investigation began, and Joe’s fraud was discovered.
1. Identify the opportunities, pressures, and rationalizations that led Joe to commit this fraud.
2. What simple procedures could the company have implemented to prevent the fraud from occurring?