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Fashioning a Fraud

How internal auditors looked into suspicious patterns during a travel and expense audit, and found an office manager who bankrolled her personal splurges with company funds.

October 2007
from Journal of Accountancy

This is the story of how a travel and expense report audit exposed a fraudster who siphoned money from the fashion company where she worked to fund her own lavish spending.

The fraudster, Bobbie Jean Donnelly, had taken advantage of a lack of adequate controls over her division’s budget and a lax system for reviewing expenses. The company’s internal audit team detected her crime by analyzing patterns in a year’s worth of reports from employees with the highest travel and expense bills.

Donnelly was hired as an administrative assistant to the manager of a Los Angeles-based design division for a multibillion-dollar retail corporation. Based on her strong performance, she was quickly promoted to office manager for the division.

In addition to managing her boss’s needs, she supervised support personnel and prepared and oversaw the design department’s budget. Her manager gave her the responsibility to provide the first level of expense report review. He relied on her to ensure that the expenses were valid before he signed them. On a few occasions, he even asked her to sign the expense reports on his behalf.

Read the full article here.