Tina Graham had worked as a records clerk in the county clerk’s office for two years. She was primarily responsible for processing applications for birth and death certificates. When the office’s senior clerk left for another job, Graham’s subsequent promotion to the position provided the opportunity that she needed to embezzle nearly US$10,000 in fees paid for copies of birth and death certificates.
To obtain a copy of either a birth or a death certificate, individuals would complete and submit an application and a processing and copy fee. The payment was supposed to be receipted at the time the application was processed. The receipts were written in duplicate form, with the original going to the person submitting the application and the duplicate left in the receipt book as support for the payment received. Receipts were summarized weekly or more often if a large number of payments had been collected. A summary sheet of the payments was prepared and taken to the Treasurer’s Office, along with the cash and checks to be deposited in the bank. The Treasurer’s Office did not normally verify receipt numbers when accepting the deposits.
The county clerk’s office was small, had little or no segregation of duties, and had lax internal controls. This combination allowed Graham to easily void receipts and keep cash fees paid by customers. In some cases, Graham would write receipts for customers, give them a copy for their records, void the receipt copy — leaving it intact in the receipt book — and pocket the money. In other instances, she would write receipts for customers, give them a copy for their records, and then shred or otherwise destroy the original and keep the money. Sometimes she pocketed the money without preparing a receipt at all. In these cases, she also destroyed the birth or death certificate application so it wouldn’t be as obvious that the money was missing.
Because of poor performance on the job unrelated to the then-unknown embezzlement, Graham was eventually demoted to receptionist after having served as the senior clerk for only six months. While she no longer had primary responsibility for processing applications and receipting payments, she did occasionally do so while the new senior clerk, Molly Roper, was on lunch break or out sick. Again, this opportunity gave her access to cash. One day, upon returning from lunch, Roper noticed a birth certificate application on Graham’s desk. When she returned to her office, Roper expected to see a receipt for the money that would have been paid when the application was accepted. The receipt book was on her desk, but there was not a new receipt written in it. Roper then checked the cash drawer but found no additional money in it. Thinking Graham had not had time to write the receipt, she took the receipt book to her to complete the process. Receipts were supposed to be written while applicants were still in the office, and a copy was supposed to be given to them. Graham explained that the woman completing the application said her husband had cancer and could not work and they were barely getting by, so she let the woman submit the application without a payment. While Roper sympathized with the situation, she knew it was not their right to accept applications without payment. She returned to her office and called Barbara Jameson, the county clerk and her boss, who was at a training event.
When Jameson returned to the office the next day she discussed the situation with Roper and then asked Graham about it. Jameson and Roper then played the tape from the office surveillance camera. Fortunately, the tape included both video and audio. In reviewing the tape, they noticed that the woman who Graham claimed she had not charged actually did hand her cash with her application. In addition, it was clear from the audio that she never mentioned anyone having cancer and not being able to pay. In addition to the suspicions generated from the missing payment, the review of the video made Jameson consider the possibility that this might not be a one-time situation. Graham was again called into Jameson’s office where she denied any wrongdoing. When Jameson told her that they had the tape, Graham refused to discuss the issue further. She was immediately put on suspension without pay while the county auditor and Jameson investigated. The investigation revealed the multiple ways Graham embezzled from the office and how she altered or destroyed the source documents:
- Receipts were never written for some cash payments although applications were processed, which was verified by checking all the applications and reviewing the receipt book for the applicant’s related payment.
- Receipts were written for cash payments and then later voided even though the applications were processed, which also was verified by checking the applications and comparing them to the receipt book. Most of the receipts that had been marked “void” had related applications that had, in fact, been processed.
- Receipts were written for cash payments but then later destroyed or removed from the receipt book. The timing of previous and subsequent receipts as reconciled to applications supported this finding.
During the investigation, Graham resigned from her position. She was later indicted and ordered to pay restitution in lieu of jail time.
Following the investigation, Jameson put new procedures in place to provide better control over funds related to birth and death certificate applications and payments. The first change involved switching from a duplicate to triplicate receipt book. As before, the original was to be given to the applicant, the second copy was to stay intact in the receipt book, and the third copy was to be taken with the deposit to the treasurer’s office. The treasurer’s office was required to check the beginning number to the previous day’s ending number and verify that all receipts were received in sequence and that none were missing. The deposits were required to be made daily so that no cash was on hand in the county clerk’s office for more than a day. Also, Jameson modified the birth and death certificate applications to include a place to write the related receipt number, which would reduce the chance of an application being processed without a receipt. In addition, a second clerk was made responsible for reconciling the receipts and applications that the other clerk processed, and then preparing the deposit to be taken to the treasurer’s office. On an intermittent basis, Jameson would reconcile the applications to the receipt book and then to the deposits. In addition, she reviewed the receipt book weekly to ensure there were no missing receipts and that all voids were substantiated. Finally, Jameson rotated the duties of the two clerks on occasion.
- The use of prenumbered applications and receipts, and procedures to check for missing numbers, will make it more obvious when receipts have been destroyed. Any missing numbers should be investigated immediately as they may indicate fraud.
- Staff duties should be rotated on occasion to ensure fraud is more difficult to carry out and conceal.
- Accounting documents should be linked to source documents so that it is more obvious when items are missing.
- Deposits should be made daily to decrease the likelihood of money being lost or stolen.
- Cash handling procedures such as receipting and deposits should be segregated and reconciled to each other daily. Segregation of duties would require collusion for fraud to occur. Daily reconciliations make it more obvious if receipts are not being deposited or are being deposited for less than intended.