Abstract
A case illustrates the calamitous consequences that can result when a seemingly trustworthy employee commits fraud and the basics of fraud prevention and detection are ignored. The 10th Circuit Court of Appeals upheld the conviction of a company controller on 3 counts of knowingly filing a false tax return. The controller failed to report almost $3 million in income she obtained, allegedly as the architect of an embezzlement scheme she perpetrated on her employer, Wichita Sheet Metal. Three factors that constitute fraud risk are perceived pressure facing the person, perceived opportunity to commit fraud, and the person's rationalization or attitude. The simple moral to employers and CPAs is to pay attention to what goes on outside the books, too. While one is focusing on the numbers, one should keep one eye and both ears open for disgruntled employees.
