If someone could give me some ideas to discuss, that would be great! Particularly anyting to do with access.

Introduction

The internal auditor of Missouri State University was in a quandary. Several retail items from a major supplier were on clearance; and the paper trail led to a check from the supplier that had not been cashed (in situations where merchandise is on clearance the supplier often provides a check to help offset the loss to the bookstore). The auditor decided to call the manager of the bookstore, Mark Brixey.

Brixey was on vacation, but the auditor was able to contact him. Brixey confirmed that the bookstore did receive a check from the supplier, but the check was locked in his desk. Brixey said not to worry; he would deposit the check as soon as he got back from vacation. The auditor was not comfortable with this, and decided to unlock the desk and retrieve the check. Once the desk was unlocked, the internal auditor found the check.and over $80,000 in cash.

In August of 2012, the Missouri State University Bookstore fraud was discovered during the routine internal audit. The former bookstore manager, Mark Brixey, was charged with embezzling more than $1.1 million dollars from the bookstore mostly from the textbook buyback program. Brixey was the bookstore manager from 1998 to 2012 and he began embezzling the money in 2003. The first year he stole $29,000; the amounts he stole steadily increased each year. Once the fraud was discovered he was placed on administrative leave by the University and then later resigned. He was later found guilty in federal court of illegal wire transfers and was sentenced to federal prison.

The Fraud

The internal audit department at Missouri State University discovered the fraud during the internal audit while the bookstore manager was on vacation. The internal audit team found inventory markdowns that had a reference to a specific check that should have been accounted for by the University. The team then contacted the director and found out the check was in his desk, and then they decided to get access to his desk to account for the check. When searching through his desk they did not find the check, however they did find over $81,000 in cash (McHaney), and when Brixey returned from his vacation he could not explain what happened to the missing check (Grant). After this was discovered, the internal audit was extended to further investigate the fraud.

The main sources of missing funds discovered in which Brixey was responsible for include:

Checks from textbook companies payable to the University or University Bookstore for purchase of wholesale inventory;

Buy-back or commission checks and cash from Follett payable to the University or University Bookstore;

Checks payable to the University or University Bookstore from Follett from the purchase of University Athletic Department owned textbooks which were returned by student athletes to the Athletics Office;

Checks payable to the University or University Bookstore from Follett for shared expenses during the buy-back process;

Checks payable to the University or University Bookstore from Follett for online sales of textbooks (McHaney).

The total of these missing funds amounted to $1,324,280.68, but the net amount of missing funds was $1,210,701.18 after the internal audit team discovered the cash in Brixeys desk (McHaney).

Most of the money that Brixey stole was through the textbook buy-back programs conducted on campus twice a year at the end of each fall and spring semester and the sale of wholesale textbooks to textbook companies. The University would bring in an outside company, Follett Educational Services, to operate the buy-back programs. Brixey was in charge of handling all interactions with Follett. At the end of each buyback period, a Follett representative would write a commission check to the University for allowing them to conduct the program on campus. The check was given directly to Brixey, and he would then take the check to the Bursars Office to be cashed, claiming that he needed the cash in order to pay students for textbooks (Former Bookstore Manager Sentenced). The Bursars Office took Brixeys word and did not question him whenever he cashed the checks. The bookstore would also sell textbooks to Follett that were no longer used by professors; the University would receive a check from Follett for these textbooks and Brixey would go cash these in the same manner as he did the commission checks. During the last two years that Brixey was the director, the Follett representative had started paying the University in cash instead of writing a check. The total of the missing funds for the buy-back process amounted to $275,555.64, and the total of missing funds for the sale of wholesale textbooks to textbook companies was $645,732.71.

The checks payable to the University for the Athletics Department owned textbooks were also given to Brixey. Brixey never accounted for the checks, and never transferred the funds to the Athletics Department either. The total of the missing funds to the Athletics Department was $385,294.

The rest of the missing funds were from Follett checks that were for shared expenses amounting to $5,155.03, and for the online sales of textbooks totaling $12,543.30.

After Brixey cashed the checks or received the checks he failed to record these transactions in the Universitys accounting system; he would keep the cash from the checks and the cash from the Follett representative for his own personal use (Former Bookstore Manager Sentenced).

Solving the Problem

The disclosure of the fraud provided unwanted negative publicity for the university; along with the realization that the bookstore was financially vulnerable. The internal audit group at Missouri State University decided to extend their internal audit and prescribe additional controls that would help prevent this type of fraud from occurring in the future.

List and discuss some controls or policies that should have been in place over cash at the University Bookstore.... If someone could give me some ideas to discuss, that would be great!