Jack Robinson embezzled over £500,000 from his employer. Jack the CFO had been with the company for many years and had worked his way up from Bookkeeper to Assistant Accountant to Financial Controller and ultimately to Chief Finance Officer (CFO). What was most interesting about Jack’s role as the CFO is that with all the promotions leading finally to CFO, he retained custody over the bank reconciliations. Jack, who has a dominant personality, succeeded in creating a barrier between himself and anyone who worked for him. His physical size and manner reportedly intimidated anyone who wished to confront him. In addition, the company, perhaps unwittingly, allowed him to authorise contracts with suppliers, approve payments, actually print and sign Cheques, receive bank statements, and perform bank reconciliation. Jack took advantage of his position and stole from his employer through almost a dozen different schemes over a period of seven years. The schemes ranged from a falsified employee workers’ compensation claim (under which Jack paid for his children’s braces) to an expense account fraud whereby the company paid Jack’s credit card bill through a corporate Cheque, while at the same time, he submitted the charges on his expense account and was therefore reimbursed twice. He also paid for lavish family travel and entertaining at the company’s expense and was part of a scheme with suppliers whereby he received kickbacks in return for giving them various contracts. The schemes were ultimately discovered when a disgruntled secretary approached Human Resources and informed them that she thought something was peculiar about handling the CFO’s expenses. She also questioned why he was still handling the bank reconciliation.

Required

(a) In the case study, discuss how Jack was able to carry out his various fraudulent schemes for so long undetected.

(b) Critically examine what created an opportunity to commit the fraud.

(c) Identify and discuss the controls that should be put in place to help deter, prevent and detect similar fraud in future.