E5-18A. (Learning Objectives 1, 2: Learning about fraud; correcting an internal control weakness)

Barry Floyd served as executive director of Downtown Kalamazoo, an organization created to revitalize Kalamazoo. Over the course of 13 years, Floyd embezzled $348,000. How did Floyd do it? By depositing subscriber cash receipts in his own bank account, writing Downtown Kalamazoo checks to himself, and creating phony entities to which Downtown Kalamazoo wrote checks.

Downtown Kalamazoo was led by a board of directors comprised of civic leaders. Floyd’s embezzlement went undetected until Downtown Kalamazoo couldn’t pay its bills. Give four ways in which Floyd’s embezzlement could have been prevented.