Professor Elam

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Local Housing Official Embezzles $131 K

Laura Morales  estimates that she embezzled some $131,000 from a Section 8 Housing Fund. 

The numbers mentioned in the article run much higher. 

I have noted the importance of internal auditing in class. The importance of internal audit will only grow in the future what with SARBOX. And in a declining economy there will be more people 'tempted' to embezzle. While internal audit does not necessarily exist to uncover fraud,this is an increasing component of its focus. SARBOX rules require external auditors to make a statement about potential fraud. 

It took five years to bring the case against Morales, makes one wonder how many more have not been caught or managed to leave the scene….
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2 responses to “Local Housing Official Embezzles $131 K”

  1. Kristin Avatar
    Kristin

    Just amazing. Dr. Elam, did you know that one of our current A&M students works for the accounting firm who audited their books, and might have even worked on that audit directly. Let me know if you want a name so you can pick his brain.

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  2. Dennis Elam Avatar
    Dennis Elam

    perhaps we shold be picking Ms. Morales brain…..after all her plan worked, for five years, the auditors failed to properly measure detection risk, the failure to uncover a problem, they estimated too low on this problem. The clue is for Ms. Morales to explain how she so easily circumvented whatever minimal internal controls existed to prevent this. Clearly she had access to the checks and the signature stamp, Apparently no one examined that bank account, how did these items clear the budget? We have failures of
    physical controls over check and signature stamp
    budget controls for expenditures
    internal controls of checking expenditures to budget
    enforced vacations, time off for someone else to come in and assume control?
    fraud prevention simply did not work, internal control checklist failed

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