Question

Victoria A. Ladd, 51, was employed by Jos-Tech, Inc., a custom plastics fabricating company located in Kent, Ohio, for many years. From January 2013 until January 2018, she wrote several checks to herself and cashed them or deposited them into her personal accounts. She also authorized electronic payments from Jos-Tech’s bank accounts to pay off her personal VISA and Mastercard charges. The checks and electronic payments she directed to accounts to benefit herself or cashed totaled approximately $490,462 over a five-year period.

Ladd pleaded guilty to bank fraud in a plea agreement dated November 18, 2019, in the U.S. District Court for the Northern District of Ohio (Case No. 5:19 CR 655). She is free on bond, awaiting sentencing in March 2020.

Questions:

1. List as many job duties of Victoria Ladd that you can surmise from the story.
2. Classify the job duties you listed into one of these three categories: asset handling; record keeping; and transaction approval.
3. How might the management at Jos-Tech have prevented Ladd’s fraud scheme?

Answer 1

1.Victoria Ladd was both responsible in issuing checks, being authorized to issue checks/payments (meaning, no dual signatures), checking the accuracy of the transaction (recording in the books) AND verifying all receipts, refunds or transfers. She receives/issue checks and has been the one that does the reconciliation.

2.Asset handling: Receiving checks from customers and issuing checks for suppliers (she's the cash handling clerk)

Record-keeping: Recording the the fraudulent transactions as legit business transactions; the one who os responsible with the books of account (cash processing clerk)

Transaction Approval: Issuing checks without dual signatures; reconciliation of accounts (accounting clerk)

3.The management at Jos-Tech have prevented Ladd's fraud scheme if they established an internal control for separation of duties. Ladd should not be the one initiating the transaction, approving it, recording it, reconciling it, handling the asset and reviewing the reports.

Explanation:

Segregation of duties is very important to safeguard assets and to not create an environment for fraud. It ensures that there is oversight and review to catch errors. It also helps to prevent fraud or theft because it requires two people to collude in order to hide a transaction and not just one, like Ladd.