Professional Documents
Culture Documents
Case 5 - Financial Service - Edited-1
Case 5 - Financial Service - Edited-1
Suspicions Aroused
In September, 1993, Wilson's husband Charles became very ill which necessitated her
being off work for a week so she could be at home with him. During this time, Wilson's work was
performed by other employees within her department. Nothing unusual was noted with the cash
sheets, deposits, or reconciliations. However, on Monday of the following week, employees began
realizing something had occurred during the weekend. Upon arriving at work, employees noted
the computer had a strange message on it like it had been turned on during the weekend and not
turned off properly. Since Wilson was the only one who would come into the office on Saturdays
to enter the tax receipt information into the computer, they realized that Wilson had been in the
office on Saturday. Then, the clerk who had prepared the cash sheet on Friday noticed that changes
had been made on the cash sheet. It seems the clerk's original numbers had been "whited-out" and
changed to reflect lower balances. Although the clerk was curious about the changes, she had seen
similar changes before on previous cash sheets that she had prepared. Normally, when she
questioned Wilson about the changes (since it had been preached to her the cash sheet had to be
100% correct, with no changes showing), Wilson told the clerk that the clerk had made a mistake
which was changed by Wilson and she should not worry about it. However, this time she was
certain she had not made a mistake on Friday since her cash sheet and the cash receipts counted
by another clerk had balanced. She was also disturbed by the fact that whoever had made the
changes was trying very hard to make it appear that the handwriting in the changes looked just like
the handwriting on the unchanged numbers. The clerk decided to ask Blanchard, the director, why
the change was made. Blanchard indicated she had no idea why a change had been made over the
weekend. Wilson was subsequently approached as to why the change was made? and as before,
simply commented that a mistake had been made and she had changed the numbers. The second
clerk informed Blanchard that everything had balanced on Friday and still balanced on Monday,
except the numbers were different, showing the office had taken in less cash than had been shown
on Friday. Blanchard became suspicious. She began checking tax receipts taken on auto transfers
against the amounts shown on the computer printouts. On several of the tickets, Blanchard noted
the amount on the receipt was $500 or $1,000 greater than what had been recorded on the printouts.
Since Wilson was responsible for the data entries, Blanchard realized that her close friend was
responsible for stealing a great deal of money. Finally, she contacted the Coryell County District
Attorney (DA) who instructed her to tally as much of the losses that she could while the DA's
office would initiate an investigate. When Blanchard discovered that for 1993 alone, Wilson had
taken over $100,000 from the Coryell County Tax Assessor-Collector's office, she had no choice
but to swear out a complaint against Joan Wilson with the county sheriff's office. Finally, on the
afternoon of November 8, 1993, before television cameras, Joan Wilson was arrested in her office.
On November 15. 1993, she committed suicide.
Required:
Assume you are a state auditor for the State of Texas and you are assigned to deal with
this case (counties are subdivisions of the state). Complete the following:
1. Identify the internal control weaknesses that appear to be in the Tax Assessor-Collector's
office. What types of recommendations would you make to improve the identified
weaknesses.
2. What "red flags" could you note, based on the above information, that could arouse
suspicions that some type of fraud or embezzlement could have been occurring? Why do
you suppose that the employees within the county office failed to place much emphasis on
these red flags? As a state auditor, what would you recommend to try to prevent future
occurrences of this situation?
3. Prepare a graph (bar graphs x-y format, etc.) to compare the known funds claimed by the
Wilsons versus the withdrawals made against the joint bank account. What does this graph
suggest to you? (Note: If possible, it is recommended that you do the graph using
appropriate computer software.)
4. Dr. Charles Wilson, in his defense, argued that he was unaware of the embezzlement being
perpetrated by his wife. What information can you determine from the case to refute his
argument?
5. It appears that this county office did not have an internal auditor on its staff. In fact, the
state did not conduct any audit work until the embezzlement was discovered. Do you think
that an internal auditor might have been able to uncover this fraud? If so, how do you think
that the internal auditor would handle the situation?