Executive Summary: Introduction: 1) Lack of Training on System of Record: 2) Separation of Duties 3) Discover card Convenience Checks: 4) Rubber Stamping: 5) Lack of Audit: While Joe Body The This is part of the fraud investigation report and below individuals were interviewed. Procedures: In addition to conducting interviews, the fraud investigation team reviewed the current procedures in the areas procurement and payroll. Procurement: 1. Supervisor completes Purchase Order including the following required information and sends to Accounting Technician for processing: a. Recommended Vendor b. Description of item (s) or services required. c. Quantity d. Estimated price per unit e. Budget/Accounting Code f. Signature and date 2. Accounting Technician a. Receives Purchase Order b. Enters Purchase Order Number and date into Purchase Order Journal c. Determines Verifies inventory isn’t sufficient to meet request d. Determines purchase process i. Small purchase under $100 – Non-competitive local purchase ii. $100 - $499 – Documented price comparison iii. Over $500 – Financial Manager approval to solicit at least 3 formal competitive bids. iv. Financial Manager approval signature on Purchase Order e. Orders item/service via copy of Purchase Order f. Receives supplies and initials packing slip. g. Accepts services as completed and initials vendor invoice h. Files all paperwork in individual vendor file i. Notes items or services received on office copy of Purchase Order. 3. Posts Accounts Payable i. Credits account Payable ii. Debits Asset Account 4. Processes Invoice a. Compares invoice to packing slip/purchase b. Processes electronic payment or cash payment (Petty cash fund) c. Debits Accounts Payable Credits Cash (Field Offices require prior approval to use local checking accounts.) Payroll: 1. Employee completes time sheet a. Name b. Employee Number c. Date of work charged d. Organization Code i. 000 –Headquarters ii. 001 – 010 Region Number iii. 01 – 052 – Field Office See Organization Manual 1. Note Wyoming is 050 e. Activity code i. 0001 –Administration – fill out time for administration ii. 002 - Vacation iii. 003 - Sick Leave iv. 004 - Comprehensive Leave – paid by more time off they will 90 hours per week and they wont work on summers v. Survey vi. Design vii. Construction viii. Other – Explain in comments section on back f. Comments: Add comments including name/location of training g. Signature and date submitted to supervisor 2. Supervisor a. Sign and date 3. Accounting Technician a. Review for completeness b. Enter into Payroll System c. Initial and date d. Prepare ad hoc payroll reports as requested Results Procurement: Payroll: Follow-Up Recommendtions: Conclusions in Report: Joe’s Engineering, LLC Payroll Procedures 1. Employee completes time sh ...

1. Executive Summary:
Introduction:
1) Lack of Training on System of Record:

2. 2) Separation of Duties
3) Discover card Convenience Checks:
4) Rubber Stamping:
5) Lack of Audit:
While Joe

3. Body
The
This is part of the fraud investigation report and below
individuals were interviewed.

4. Procedures:
In addition to conducting interviews, the fraud investigation
team reviewed the current procedures in the areas procurement
and payroll.
Procurement:
1. Supervisor completes Purchase Order including the following
required information and sends to Accounting Technician for
processing:
a. Recommended Vendor
b. Description of item (s) or services required.
c. Quantity
d. Estimated price per unit
e. Budget/Accounting Code
f. Signature and date
2. Accounting Technician
a. Receives Purchase Order
b. Enters Purchase Order Number and date into Purchase Order
Journal
c. Determines Verifies inventory isn’t sufficient to meet request
d. Determines purchase process
i. Small purchase under $100 – Non-competitive local purchase
ii. $100 - $499 – Documented price comparison
iii. Over $500 – Financial Manager approval to solicit at least 3
formal competitive bids.
iv. Financial Manager approval signature on Purchase Order
e. Orders item/service via copy of Purchase Order
f. Receives supplies and initials packing slip.
g. Accepts services as completed and initials vendor invoice
h. Files all paperwork in individual vendor file
i. Notes items or services received on office copy of Purchase
Order.
3. Posts Accounts Payable
i. Credits account Payable
ii. Debits Asset Account

5. 4. Processes Invoice
a. Compares invoice to packing slip/purchase
b. Processes electronic payment or cash payment (Petty cash
fund)
c. Debits Accounts Payable
Credits Cash
(Field Offices require prior approval to use local checking
accounts.)
Payroll:
1. Employee completes time sheet
a. Name
b. Employee Number
c. Date of work charged
d. Organization Code
i. 000 –Headquarters
ii. 001 – 010 Region Number
iii. 01 – 052 – Field Office See Organization Manual
1. Note Wyoming is 050
e. Activity code
i. 0001 –Administration – fill out time for administration
ii. 002 - Vacation
iii. 003 - Sick Leave
iv. 004 - Comprehensive Leave – paid by more time off they
will 90 hours per week and they wont work on summers
v. Survey
vi. Design
vii. Construction
viii. Other – Explain in comments section on back
f. Comments: Add comments including name/location of
training
g. Signature and date submitted to supervisor
2. Supervisor
a. Sign and date
3. Accounting Technician
a. Review for completeness

6. b. Enter into Payroll System
c. Initial and date
d. Prepare ad hoc payroll reports as requested
Results
Procurement:

7. Payroll:
Follow-Up Recommendtions:

8. Conclusions in Report:
Joe’s Engineering, LLC
Payroll Procedures
1. Employee completes time sheet
a. Name
b. Employee Number
c. Date of work charged
d. Organization Code
i. 000 –Headquarters
ii. 001 – 010 Region Number
iii. 01 – 052 – Field Office See Organization Manual
1. Note Wyoming is 050
e. Activity code

9. i. 0001 –Administration – fill out time for administration
ii. 002 - Vacation
iii. 003 - Sick Leave
iv. 004 - Comprehensive Leave – paid by more time off they
will 90 hours per week and they wont work on summers
v. Survey
vi. Design
vii. Construction
viii. Other – Explain in comments section on back
f. Comments: Add comments including name/location of
training
g. Signature and date submitted to supervisor
2. Supervisor
a. Sign and date
3. Accounting Technician
a. Review for completeness
b. Enter into Payroll System
c. Initial and date
d. Prepare ad hoc payroll reports as requested

10. Joe’s Engineering LLC
Procurement Procedures
1. Supervisor completes Purchase Order including the
following required information and sends to Accounting
Technician for processing:
a. Recommended Vendor
b. Description of item (s) or services required.
c. Quantity
d. Estimated price per unit
e. Budget/Accounting Code
f. Signature and date
2. Accounting Technician
a. Receives Purchase Order
b. Enters Purchase Order Number and date into Purchase Order
Journal
c. Determines Verifies inventory isn’t sufficient to meet request
d. Determines purchase process
i. Small purchase under $100 – Non-competitive local purchase
ii. $100 - $499 – Documented price comparison
iii. Over $500 – Financial Manager approval to solicit at least 3
formal competitive bids.

11. iv. Financial Manager approval signature on Purchase Order
e. Orders item/service via copy of Purchase Order
f. Receives supplies and initials packing slip.
g. Accepts services as completed and initials vendor invoice
h. Files all paperwork in individual vendor file
i. Notes items or services received on office copy of Purchase
Order.
3. Posts Accounts Payable
i. Credits account Payable
ii. Debits Asset Account
4. Processes Invoice
a. Compares invoice to packing slip/purchase
b. Processes electronic payment or cash payment (Petty cash
fund)
c. Debits Accounts Payable
Credits Cash
(Field Offices require prior approval to use local checking
accounts.)
Joe’s Engineering
Cast of Characters
Field Engineer --- James Townsend
Regional Accountant – Susan Analog

12. Assistant Engineer – Marilyn Monroe
Region Office Human Relations Officer – Susan Little
Headquarters Human Relations ---Jack Daniels
Former Financial Manager – Jack Retired
New Financial Manager – Joe Newman
Chief Executive Officer – Warren Moon
Adams Convenience Store – Charles Storage
Cheyenne Taxi – Doug Driver
Contract Accountant – Shirley Munster
Engineer – Jane Engineer
Project Accountant – Paul Trustworthy
Receptionist – Mary Polite
Administrative Accountant – Adam Smart
Administrative Assistant – Elaine Efficient
Administrative Assistant/Computer Assistant – Dan Double duty
Fiscal Program Assistant (working title)
Finance Technician
GS-0503-07
(Note: Adam’s job was tailored after this federal job

13. description, but Joe’s Engineering Wyoming Division office
never got around to cleaning it up for final submittal to Region
Human Resources for classification and approval. It does fairly
represent the duties expected to be performed by Adam. )
Position Summary
Incumbent serves as the Financial Technician for the Wisconsin
Federal-Aid Division office and serves as a member of the
Administrative and Financial Services Team. This position is
critical to the efficient operation of the office as the incumbent
provides support for the financial and administrative operations
of the federal-aid office. The incumbent makes administrative
reviews of a variety of documents submitted by State agencies,
and provides administrative control and fiscal accountability of
program authorizations.
Major Duties and Responsibilities
The incumbent administers the FHWA internal and Federal-aid
project accounting programs, as well as various administrative
programs. Manages the Federal-aid project accounting systems
for the Division, monitoring usage of funds and obligation
limitations. Performs detailed review of project authorization
documents, resolving problems with the Wisconsin Department
of Transportation before distributing to the FHWA program
managers for technical review. Performs project accounting
functions via the Fiscal Management Information System
(FMIS).
The incumbent works closely with the Divisions financial and
engineering staffs to process project authorizations and assists
in tracking environmental documents and project data using the
Project and Program Action Tracking Information (PAPAI).
Performs operational accounting functions via the DELPHI
accounting system for GOE. Prepares documents necessary to
obligate, accrue and expend funds.

14. Assists in the tracking of the budget.
Procures furniture, equipment, telephone communications,
leased space repairs and alterations. Analyses procurement
requests and ensures they are appropriate and properly
documented; ensures purchase orders are issued in accordance
with DOT, FHWA and GSA rules and regulations, and items
received meet specifications of the procurement.
Maintains the electronic records management system. Develops
processes and procedures and provides training to staff on usage
and maintenance.
Serves as Briefing Coordinator and ensures the respective staff
updates project/program electronic briefing file quarterly.
Ensures all updated briefings are placed in the Briefings
database. Responsible for coordinating with Wisconsin DOT
and HQ Public Affairs regarding media events, such as ribbon
cuttings, groundbreakings, etc..
Provides support to Division staff on large and/or complex
technical tasks or projects utilizing a variety of information
databases and computer software applications.
Serves as the Division personnel liaison assisting management
in developing staffing packages with position descriptions, job
analysis, and vacancy questions, etc.; prepares or oversees the
preparation of requests for personnel actions; secures
confidential/sensitive information; provides program
information on benefit programs; conducts new employee
orientation sessions; processes required clearance paperwork for
separating employees; coordinates with the respective Human
Resources Office on appropriate issues; and provides general
program information to employees and management on the
Incentive Awards and Recognition Program, the Merit
Promotion Program, and the Performance Appraisal System.

15. Provides backup to the administrative assistant by providing
assistance to employees in preparation of travel documents (in
accordance with Federal Travel Regulations), entry of time and
attendance information (both requiring the use of automated
systems) and all other administrative functions.
Factors
FACTOR 1 - KNOWLEDGE REQUIRED
Knowledge of the internal and external customers to supply,
develop or distribute information in support of FHWA
programs. This includes being able to apply agency budget
procedures.
Working knowledge of the Federal-aid program and the overall
mission and organizational functions, policies, programs and
procedures of the FHWA Division offices.
Skill in communicating effectively with other Federal, State,
and local officials and the public to correctly receive and
present information relative to items of concern to Division
Office operations.
Knowledge of the laws, regulations, and procedures governing
the procurement of supplies, equipment, publications, and
services for the Division.
Achieve effective decision making through the financial
systems used.
Detailed knowledge of the DOT/FHWA and GSA procedures
related to excess property and inventory techniques.
Demonstrated ability to recognize the significance of
information to improve FHWA programs.

16. Demonstrated ability to commit to continuous improvement of
the federal-aid program and its delivery.
Demonstrate the ability to recognize the significance of
information to improve FHWA programs.
FACTOR 2 - SUPERVISORY CONTROLS
Overall objectives are established and the incumbent
independently carries out assignments, resolving most of the
conflicts and coordinates their work with others to ensure the
mission of the financial specialty area is satisfied.
FACTOR 3 - GUIDELINES
Guidelines include various user manuals, DOT and FHWA
Notices and Orders, Division Office Memorandums, standard
operating procedures, and other FHWA program guides and
regulations. Judgment is required in researching and applying
guidance to day-to-day operational problems and issues. These
guidelines are generally applicable, however, the incumbent
must also exercise initiative and judgement in specific
situations in which existing guidelines do not apply and
interpretation is necessary.
FACTOR 4 - COMPLEXITY
The incumbent typically performs complete assignments
involving different and unrelated processes and methods.
Federal-aid Program assignments often include providing
assistance in the resolution of problems having some or all of
the following characteristics: 1) interrelated facts, 2) facts
obtainable from a variety of sources, 3) some disputed facts or
ambiguous conditions, and 4) one or more related issues or

17. questions. The work routinely requires contact with
engineering, planning, right-of-way, administrative and fiscal
personnel.
Internal administrative responsibilities encompass a wide
variety of duties requiring knowledge of many processes and
methods. Responsibilities require independent assessment of
unusual circumstances, variations in approach, unique situations
and incomplete or conflicting data. Consequently, the
incumbent must often use initiative and judgment to plan, work,
interpret data, and develop methods and techniques to be used
to solve each challenge.
FACTOR 5 - SCOPE AND EFFECT
Work encompasses a wide variety of problems and situations
with established or unique criteria. Problem solving may
involve State personnel and/or Division personnel for a variety
of operational functions. The work product routinely involves
and affects the State, Division, Headquarters, vendors and GSA
personnel.
FACTOR 6 - PERSONAL CONTACTS
Contacts include FHWA employees both within and outside the
Division Office, personnel from other Federal, State, and local
government agencies, employees in the private sector, and the
general public.
FACTOR 7 - PURPOSE OF CONTACTS
The purpose of the contacts is to provide and share information;
interpret and apply regulations and procedures; and resolve
problems and issues related to program assignments.
FACTOR 8 - PHYSICAL DEMANDS

18. The work is primarily sedentary; however, some walking,
standing, bending and carrying light items such as files, papers
or books are required. No special physical demands are required
to perform the work.
FACTOR 9 - WORK ENVIRONMENT
The work is performed in an office setting. Occasional travel by
government vehicle or commercial vehicle is required.
Sheet1Approved Vendor ListVendorVin No.AdressCheyenne
Taxi2001P.O Box 1001, Palato, CalifAdam's Convience
Store2002P.O Box 100, Laramie, WyomingJoe and
Mary2003795 1st Street, Cheyene, Wyoming Apple
Computer2004204 Main Street, Cheyene, WyomingChaney
Office Design20055334 University Ave, Jacksonhole,
WyomngAuthors Catering2006211 East Street, Cheyenne,
WyomingJoseph & Mary2007795 First Street, Suite 110,
Cheyenne, WyomingWestern U.S. Office Furniture2008133445
Gilbert Street, Denver, ColoYour Photo Copy
Headquarters20091234 Main Street, Cheyenne, WyomingLarami
Computer Supply2010952 University Ave., Laramie,
WyomingHoward Professional Prints20112901 Market Street,
Cheyenne, WyomingBusiness Max20122905 Market Street,
Cheyenne, WyomingCheyene Office Supply20132909 Market
Street, Cheyenne, WyomingWyoming Glass20171851 Bly Road,
Laramie, WyomingCheyenn Gas, Water and Elect2018100 Main
Street, Cheyenne, WyomingHoliday Inn Catering20192856
Tourist Ave., Cheyenne, WyomingWyoming Auto
Cooperative20239845 Outskirts Ave. Cheyenne, WyomingJ and
M SuppliesCheyenne MotorsPanera Catering
Sheet2
Sheet3

19. Sheet1Joe's Engineering21234 - Paul Trustworthy, Project
AccountantSource: Labor Testing22345-Mary Polite,
ReceptionistPayroll2000-200424320-Adam Smart,
Administrative Accountant023000 - Elaine Efficient,
Adminsitrative Assistant24000- Dan Doubleduty, Admin.
Assit/Computer Assist.YearEmployee NumberReg.
HoursLeaveHolidayOverime2004HolidayPurpose: Hourly
employee time sheets for misuse of
overtime2123420808072102and/or ghost
employees****1040000243202080072248223002080807202234
52080807202300020808072332003212342080807210404500002
43202080807220422300208080720223452080807202300020808
07202002212342080807210424320208080721682230020808072
02234520808072023000702024020012123420808072104200001
00080365624320208080721022230020808072022345208080720
20002123420808072842000010008036562432020808072482230
020808072022345208080720
Sheet2
Sheet3
Sheet1Operating Budget Summary 2000 -
20052000Actual2001200220032004Personnel
Salaries3650003690963750003745193750003790003800003850
00380000379550 Fringe
Benefits50,00049,78950000497895000050000500005000050000
50000
Travel150000123,21014000013867414000013977714000012456
9140000139458
Training/Tuition150001800020000230002500034000330003000
0300027000 Professional Conference
Fees4,000400040004000400010000Total
Personnel584,000564,0955890005899825940006037775730005
89569573000596008Equipment and Supplies General
Office10000146941500017750200003459835000399504000043
000 Lap Top
Computers5000100050002000500010005000030001000 LAN

20. Update10,00089925000439850004950500010002000500
Printers500050005000001000 Photo
Co;pier3,000300030003000200002000200050003500 Office
Equipment
Lease5000450050005000500050005000500050005000 Fleet
Replacement25,0002400025000199462000002000022349200002
3086Total
Equipment63,00061,186630005209457000455486200071299750
0076086Utilities
Electricity12,00012000120001200012000120001200012000120
0012000
Gas16,00017000160001600016000160001600016000160001600
0 Water5,000400050005000500050005000500050005000Total
Utilities33,00033,00033000330003300033000330003300033000
33000Total Operating Budget680,000658281685000675-
76684000682325703000693868705000704094
Sheet2
Sheet3
Joe’s Engineering, LLC
Adams Story
Congratulations on your recent appointment as the new
Financial Manager for the Wyoming Field Office. As Financial
Manager, you are responsible for the financial management of
both the $500,000,000 project accounting and $150,000 internal
operations budgets.
You and the new Field Engineer report to the office at the same
time. The Field Engineer, your boss, informs you that he wants
you to assume the responsibility for supervising all internal
office operations, including the Accounting Technician and
Computer Specialist functions.
You immediately become concerned about the latest internal
control review. You begin implementing the internal control
improvements recommended in the report. (Please refer to week

21. 1 class discussion of Joe’s Engineering, LLC.)
Adam is belligerent and defensive. He always has an excuse for
not explaining his procedures, and refuses to train a back-up for
his accounting duties. You continue putting pressure on him to
get prior approval of all expenditures, preparing monthly
internal budget and individual project budget status reports.
You send Adam and your Contract Accountant to a special
“Accounting Reports” training session put on by Concordia
Accounting in the Washington Office. Upon their return the
Contract Accountant tells you that she and Adam had to share a
computer throughout the training and that while Adam allowed
her to observe the training, he would never give her access to
the keyboard. This was in direct contradiction to your orders to
Adam that he was to be sure the Contract Accountant was fully
cross trained in downloading standard accounting reports and
being able to create special request ad hoc reports. You inform
Adam that he since we have a Computer Specialist he is no
longer authorized to access the firms system from remote sites
including his home computer. His privilege of flexible work
hours, allowing him every other Friday off, were rescinded until
you were convinced he had cross trained the Financial
Specialist Contract Specialist in the Accounting System.
On Monday you inform Adam that he is move to desk by the
front door and will cover for the receptionist any time she is
away from her desk. He explodes walks out of the office. On
Tuesday he calls in sick. Tuesday afternoon you move his
computer and personal items to his new work station.
Wednesday he returns to the office only to explode again upon
seeing he had been moved “up front”. He tells everyone this is
an insult and storms out of the building.
Joe’s Engineering, LLC
Memo
To: Joe, Financial Manager
From: Field Office Engineer

22. Date: Reporting Date:
Subject: Welcome to the Office
Congratulations on your recent appointment as the new
Financial Manager for the Wyoming Field Office. As Financial
Manager, you are responsible for the financial management of
both the $500,000,000 project accounting and $150,000 internal
operations budgets. You will be reporting directly to the
Assistant Field Office Engineer, Phil Busy.
Phil Busy and you will be both are reporting to the office at the
same time. Mr. Busy and I have agreed that you are to assume
the responsibility for supervising all internal office operations,
including the Accounting Technician and Computer Specialist
functions.
Please be aware that there are concerns regarding the latest
internal control review. While we realize that this report was
done as a training exercise, Mr. Busy with would appreciate
your thoughts on the reported recommendations. (Please refer to
week 1 class discussion of Joe’s Engineering, LLC.)
Signed:
Memo # 2 –
To: CC Personnel Office, HQ
From: Joe, Financial Manager, Wyoming Division
Subject: Adam Smart Performance and Attitude Observations.
Adam is belligerent and defensive. He always has an excuse for
not explaining his procedures, and refuses to train a back-up for
his accounting duties. I continue putting pressure on him to get
prior approval of all expenditures, preparing monthly internal
budget and individual project budget status reports. I sent
Adam and our Contract Accountant to a special “Accounting
Reports” training session put on by Concordia Accounting in
the Washington Office. Upon their return the Contract
Accountant verbally reported that she and Adam had to share a
computer throughout the training, and that while Adam allowed
her to observe the training, he would never give her access to

23. the keyboard. This was in direct contradiction of my orders to
Adam that he was to be sure the Contract Accountant was fully
cross trained in downloading standard accounting reports and
being able to create special request ad hoc reports.
After reviewing the trainees internal report I informed Adam
that he since we now have a Computer Specialist he is no longer
authorized to access the firms system from remote sites,
including his home computer. His privilege of flexible work
hours, allowing him every other Friday off, was rescinded until
further notice. He is to begin training the Financial Contract
Specialist and me on the new accounting system, beginning with
the report writing capabilities.
Last Monday I informed Adam that he is moving to a desk by
the front door and will cover for the receptionist any time she is
away from her desk. He exploded with vulgarities and walked
out of the office. On Tuesday he called in sick. Tuesday
afternoon we move his computer and personal items to his new
work station. Wednesday he returns to the office only to
explode again upon seeing he had been moved “up front”. He
tells everyone this is an insult and storms out of the building.
Please advise regarding how the company wishes to handle this
situation.
Joe’s Engineering, LLC
666 66th Street
Washington, D.C.
50 Offices Nation Wide to Serve Your Engineering Needs

24. Joe’s Engineering is a national civil engineering firm
specializing in designing and constructing large commercial
buildings and highway bridges. For political reasons their
headquarters office is in Washington D. C. However, for
operational reasons they have six regional and 50 state offices.
In 1999 the firm was sold an accounting system that can be
easily integrated with the Federal and State bidding and billing
systems. While the system had been 95% designed, it had not
yet been tested via a parallel testing system.
Concordia Accounting promised the new system would contain
the following features:
1. Data can be entered at each of the 56 field offices.
2. Eventually the accounting system will be a fully integrated
system allowing state office accounting entries to be
automatically posted to the Headquarters general ledger and
project cost accounting system.
3. Field offices have the ability to reconcile their accounting
balances with the Headquarters central accounts on an as needed
basis.
4. The Chart of Accounts was completed, but due to
programming issues, some of the accounts would not be set up
for at least 6 months.
5. The accounting Manual would be ready January 1, 2000.
6. The contract with Concordia Accounting Contract included
training 5 people from Headquarters and one person from each
field office. The training was to be completed by January 1,
2000.
7. As part of the service agreement, Concordia Accounting will
provide the next 5 annual audits, including assisting in the

25. resolution of any material audit findings.
The new accounting system was put into operation beginning
January 1, 2000. The accounting manual, including year-end
instructions for reconciling field records with the headquarters
records was released in July, 2003. The manual was sent
directly to Accounting Technician in each field office.
Due to budget issues, Joe’s Engineering was forced to wait until
September, 1999 to sign the contract with Concordia
Accounting. Joe’s CEO ordered the Chief Financial Officer
(CFO) to have the system up and running before the January
2000 Board of Director and Stockholders meeting, or be
replaced.
Concordia Accounting was able to get an untested accounting
system to Joe’s Engineering on December 1, 1999. The CEO
was told the final accounting manual would not be available
until January, 2002, but a working “rough” draft of day to day
operations would be ready by January 2001. The first of three
recommended training sessions was offered to the field
Accounting Technicians during the week of December 26, 1999.
There were only sufficient funds to send one person from each
office.
The CFO ordered the new Accounting System to begin
operations on January 1, 2000. The CFO believed that because
the Field Office Financial Managers were all college accounting
graduates, they would not require training in the new system.
Over the Objections of the Wyoming Financial Manager, Adam
was hired as the Wyoming Office’s Administrative Accountant
in the Wyoming Field Office. The Field Office Engineer (FOE)
believed that because his Assistant Field Engineer needed to
understand the Company’s internal financial operations before
she could be promoted to a FOE position, she should have sole
responsibility for supervising the Accounting Technician. The

26. Financial Manager was to focus his attention on higher level
financial analysis including cash flow, return of investments,
profit margins, overhead rates and pricing of current and
proposed contracts ranging from $1,000,000 to $100,000,000.
Adam’s position description included the following primary
duties.
1. Accounting Technician responsible for maintaining the
Wyoming accounting records in accordance with standard firm
accounting procedures.
2. Inventorying, ordering and receiving office supplies,
equipment and services.
3. Paying vendors
4. Establishing and monitoring the office training and travel
budgets.
5. Serving on the office strategic operations committee.
6. Assisting the Computer Specialist.
7. Office facilities manager
8. Office Communication manager
9. Fleet Manager
10. Other duties as assigned.
In 1999 Adam was given the collateral duty of Assistant
Computer Specialist. He loved the work and saw it as an
opportunity for a major promotion when the Wyoming
Computer Specialist retires. Adam consistently received annual
outstanding performance reviews and $5,000 annual cash
bonuses for his computer work. Adam took computer-
programming classes on his own time, as well as attending
classes during the workday. The company agreed to pay for all

27. approved training. Adam soon became the “go to” person for
computer problems.
Adam prepared the annual internal operations budget. He also
submitted monthly budget status reports to the Assistant Field
Engineer. As the bottom line of the budgets never “over-run”,
the Assistant Engineer had no reason to questioned these status
reports.
By July 2002 Adam knew the Assistant Field Engineer didn’t
know and didn’t have the time or interest to learn the
accounting system. He convinced the Assistant Field Engineer
that it was a waste of a graduate engineer’s valuable time to
review and “sign off” on routine daily purchase orders and was
given the freedom to pay routine invoices. Major purchases,
those over $10,000, needed written approval before the any
formal audits. But Assistant Field Engineer never asked to see
these invoices. There was never an audit of the Wyoming Field
Office. However, there were informal internal control reviews
performed by various interns as they passed through the formal
national financial manager training program. The Interns were
assigned to six month assignments in various field offices.
These reviews were treated as ‘training exercises and never
taken seriously.
In February 2001, the Wyoming Field Office Computer
Specialist resigned. Adam was asked to perform all of the
Computer Specialist duties until the vacant Computer Specialist
could be filled. The Wyoming Chief Engineer told Adam he
would get the Computer Specialist position and a $15,000 pay
raise if he continued to show he could handle the computer
work. Adam performed all of the Computer Specialist duties
plus his own normal duties for the next 9 months. However, a
week after receiving a $5,000 exceptional performance bonus,
he was informed that a Hispanic from the Regional Office was
given the Computer Specialist position and that management
“appreciates his willingness to train the new person” when he
arrives in a couple of months. Until then Adam would continue

28. doing the Computer Specialist duties. Officially Adam was told
he didn’t get the position because he didn’t have a Bachelor’s
degree. But unofficially he heard the new Computer Specialist
was given the position for affirmative Action reasons.
In 2002 Adam began writing and cashing “Master Card”
convenience check to pay for local training and supplies. The
Assistant Engineer asked if the office had access to these types
of checks. Adam told her yes, but because of the difficulty of
controlling and reconciling the checks to Headquarter and
Region Office accounting records, he always destroys them the
same day they arrived in the mail. “He would never put the
office in jeopardy by using such unsecured instruments.” Adam
told the Region and Headquarters the same thing when asked
how his office uses the “Master Card” Convenience checks.
In January 2005 you are appointed as the Financial Manager for
the Wyoming Field Office. At this time, you are given the
responsibility for supervising the Accounting Technician. You
immediately perform an internal control review of the office
accounting system and procedures.
Control WeaknessRecommended Corrective Action