Please review the following case and answer the questions:

Case #7 - Planning Department Employee

The scenario is as follows and this is the information being provided:

• This involved the theft of cash from building, plumbing, electric, health and sign permits.

• The permit application was used as a receipt and indicated whether payment had been made in cash or by check, then delivered to the tax collector office with a deposit control form. This form listed the total funds received, broken down by check or cash, and would identify the permit account for which the funds were received.

• The money was kept unsecured in the desk until remitted to the tax collector.

• When asked why she took the money, the answer was "Because I could. There was no accountability. There were no safeguards in place and no one checking my work. It was easy and I didn't think I would get caught."

• The finance department noticed that deposits were less frequent then had been made by her predecessor (14 deposits vs. 40 deposits). After scheduling the deposits, it became apparent that cash deposit amounts were significantly lower than the previous year when a different employee made the payments. (2.5% vs. 0.5%).

• At this point, permit application files were reviewed. It was discovered that in one week 3 permits had been paid in cash totaling $82.00, but only $11.00 in cash was deposited for that week.

• The police arranged for a sting operation involving 2 undercover officers posing as applicants paying in cash. The serial numbers on the cash was used to track the bills. The total cash deposited was $40 less than the known amount of cash collected from the 2 undercover officers. When confronted about the shortage, she asked "hypothetically" if she could just pay the money back.

• Total embezzlement was approximately $5,000.

WHAT RED FLAGS ARE THERE:

EXPLAIN THE INTERNAL CONTROL WEAKNESSES:

RECOMMNENDED CONTROL PROCEDURES