AP audit reveals emergency fund embezzlement

February 29, 2012 The worker's supervisor failed to take any action for five months, which perpetuated the embezzlement of more than $2.7 million.

When an Arizona Department of Emergency and Military Affairs employee reported financial irregularities in an emergency fund for the state's National Guard in February last year, an accounts payable audit should have been launched immediately.

However, the worker's supervisor failed to take any action for five months, which perpetuated the embezzlement of more than $2.7 million, according to the state auditor general.

The Republic reports that, according to auditors and prosecutors, James Eugene Burnes' misappropriation from the emergency relief fund started in May 2003, approximately three years after he began working as a resources manager for the department.

Burnes handled nearly $5 million in donations, loan payments and income tax refunds over the eight years examined by the AP audit, approximately half of which he funneled to himself via at least 169 checks, 32 cashier's checks, a $40,000 electronic transfer and numerous cash withdrawals. He is thought to have used much of the money "for his personal expenses related to gambling and income taxes," according to the news source.

Auditors found that Burnes had "almost unfettered access" to the accounts, which facilitated the embezzlement. Setting up a robust system of checks and balances can mitigate and even prevent misappropriation. 

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Category: Accounts Payable Analysis

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