Mail Room Fraud and Internal Control

Sarat Sethi, a professional criminal, took a job as a mail room clerk at Benson & Abernathy and

Company, a large department store. The mail room was an extremely hectic work environment

consisting of a supervisor and $45$ clerks. The clerks were responsible for handling promotional

mailings, catalogs, and interoffice mail, as well as receiving and distributing a wide range of outside

correspondence to various internal departments. One of Sethi's jobs was to open cash receipts

envelopes from customers making payments on their credit card balances. He separated the

remittance advices $($the bills$)$ and the checks into two piles. He then sent remittance advices to the

AR department, where the customer accounts were updated to reflect the payment. He sent the

checks to the cash receipts department, where they were recorded in the cash journal and then

deposited in the bank. Batch totals of cash received and accounts receivable updated were

reconciled each night to ensure that everything was accounted for. Nevertheless, over a one$-$month

period, Sethi managed to steal $$100,000$ in customer payments and then left the state without

warning.

The fraud occurred as follows: Because the name of the company was rather long, some people had

adopted the habit of making out checks simply to Benson. Sethi had a false identification prepared in

the name of John Benson. Whenever he came across a check made out to Benson, he would steal it