My local news dished up another case of internal fraud that every organization should take seriously to avoid making the same mistake. A former Allina Health vice president is facing multiple felony-level embezzlement charges stemming from false expense reports and unauthorized charges on his company card. It’s possible the crime started more than 10 years ago. How could this be? What did the company do wrong? Could your organization be at risk? Keep reading to see what the county attorney revealed, as reported by the Pioneer Press.

Lesson to Learn

The case is evolving, so many details are still unknown at this point. However, unauthorized charges include season tickets to local professional sports teams. Allina placed the executive on leave when he could not justify his expenses. February 14 is the related court date. This will be an interesting case to watch. For more information, access the Pioneer Press article.

Hennepin County Attorney Mike Freeman observed that the case follows a familiar pattern, explaining, “The employee is highly trusted and, over time, the good financial safeguards stop being applied to that employee.” Sadly, this is all too true. Every internal fraud story that I’ve read indicates some degree of an organization not monitoring an employee’s activity. 

It is human nature to be swayed by looks, personality, accomplishments, job position, tenure, etc., even though none of these things indicate the likelihood that someone will or will not commit a crime.

I also think about the “ideal” cardholder—someone who is always on time and accurate with reconciling transactions, and organized with their supporting documentation. When a cardholder has a proven track record, I can see how it would be easy for a manager to skip their review duties and, chances are, the cardholder is trustworthy. Nevertheless, assumptions and intuition should not replace the execution of control procedures.

Action Items

Evaluate how well your organization applies measures to detect card misuse and inappropriate expense reimbursement requests.

• Are managers doing their jobs? Help them be successful; see a related blog post for tips.
• Do you have an effective auditing protocol? Making use of technology typically yields better results than relying on manual auditing. It might be time to rethink your P-Card auditing approach.  

Consider sharing news articles about internal card fraud with your management to illustrate what can happen.

• If your organization already does a good job with holding employees accountable for their roles, you can use these types of articles to highlight the strength of your program.
• Conversely, if you lack confidence in your organization’s controls, such articles can help support your quest for improvement.

Access more content on P-Card controls and additional blog posts on fraud incidents.

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…

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