Mac Faber was the controller of the Lewiston National Bank. In his position as controller, he was in charge of all accounting functions. He wrote cashier’s checks for the bank and reconciled the bank statement. He alone could approve exceptions to credit limits for bank customers, and even the internal auditors reported to him. Unknown to the bank, Mac had recently divorced and was supporting two households. In addition, many of his personal investments had soured, including a major farm implement dealership that had lost $40,000 in the last year. Several months after Mac had left the bank for another job, it was discovered that a vendor had paid twice and that the second payment had been deposited in Mac’s personal account. Because Mac was not there to cover his tracks (as he had been on previous occasions), an investigation ensued. It was determined that Mac had used his position in the bank to steal $117,000 over a period of two years. Mac was prosecuted and sentenced to 30 months in a federal penitentiary.
Required:
1. What internal control weaknesses allowed Mac to perpetrate the fraud?
2. What motivated Mac to perpetrate the fraud?