A recent accounts payable recovery audit found that more than $130,000 worth of checks were transferred from the Chancery Court Clerk's Office in Memphis, Tennessee, to a company set up by the court's bookkeeper, according to the Commercial Appeal.
According to Chancery judge Kenny Armstrong, the checks were part of a larger embezzlement scheme dating back to 2008. The scope of the theft may be as large as $1 million.
In addition to uncovering direct payments to Sunset Thirty-Three – a company set up by former bookkeeper Brandon Gunn in March of last year – the investigation also uncovered irregularities in the court's tax sale ledger. Several other employees were found to have authorized payments without proper backup documentation, suggesting that the court clerk's office's system of checks and balances had failed.
"This is a very serious lapse here,'' Allan Bachman, education manager of the Austin, Texas-based Association of Certified Fraud Examiners, told the news source. According to Bachman, an employee who prepares payment paperwork should not also be allowed to authorize the payment.
A recent accounts payable audit of the city of New Orleans uncovered a similar problem, according to the Times-Picayune. Personnel cuts had led to the same employees ordering and receiving goods, which created opportunities for theft.