By Liz McMahan
The number of embezzlement and fraud cases in Oklahoma over the last several months has put State Auditor Steve Burrage on the road with a presentation about how governments and businesses can avoid becoming victims.
He has taken his show, “Who’s in control?” to state school meetings, to civic clubs and to private groups.
In the program, he gives some alarming statistics from the Association of Fraud Examiners — such as, one in three employees steal from their employers and 75 percent of them won’t get caught.
Those thefts are not necessarily all monetary thefts, he said. They can involve the theft of time or property.
Burrage said he’s definitely seeing an increase in the number of requests for special audits by his office. Those are from governmental agencies. The number of thefts in the private sector are just as great as in the public sector he said.
There are signs employers can look for to identify those who are defrauding the company, but the best solution to the problem may be in prevention, Burrage said.
That is accomplished by separation of powers — making certain that one person doesn’t have responsibility for everything, he said.
Jean Kingston, Muskogee city treasurer, said that is difficult in her office right now because they are two people short and there’s not enough staff to divide duties between.
Still, she and her co-worker alternate check register reconciliation duties and have devised other ways to spread responsibility out as much as possible.
Kingston said she has attended several workshops on the need for separation of duties and, when working in the private sector, caught her supervisors stealing in two different cases.
Many businesses require employees to take off two consecutive weeks during the year, so someone else is doing their work and might discover wrong doing.
“People who handle money will often try to take money if you don’t have the checks and balances,” she said. “It’s amazing how they rationalize their actions.”
She said those who steal find come up with excuses such as “I don’t get paid enough” or start by stealing small amounts, thinking they will pay it back.
Rationalization is one side of what Burrage calls “The Fraud Triangle.” The other two sides are opportunity and pressure.
He encourages businesses to realize their company is at risk, that they must have internal controls, control the environment and take other actions to avoid theft.
Reach Liz McMahan at 684-2926 or lmcmahan@muskogeephoenix.com.
By the numbers
• 10 years ago, the annual cost of internal theft was between $60 billion and $120 billion. Today, it’s estimated at 7 percent of annual revenues or $994 billion annually.
• 49 percent of the people who steal do so for greed, 8 percent for need.
• 21 percent of gambling addicts steal to finance their gambling.
Source: Presentation by State Auditor Steve Burrage
Common
personality traits
of fraudsters
• Wheeler/dealer.
• Domineering and controlling.
• Doesn’t like people reviewing their work.
• Strong desire for personal gain.
• Have a “beat the system” attitude.
• Live beyond their means.
• Close relationship with customers or vendors.
• Unable to relax.
• Often have a “too good to be true” work performance.
• Don’t take leave time or only in small amounts.
• Often work excessive/unnecessary overtime.
• Outwardly appears to be very trustworthy.
• Often display some sort of drastic change in personality or behavior.
• Medical problems — especially for a loved one.
• Unreasonable performance goals.
• Spouse loses a job.
• Divorce.
• Starting a new business or business is struggling.
• Criminal conviction.
Source: Presentation by State Auditor Steve Burrage
