Integrity at Stake by Rollie Neal Dimos

Author:Rollie Neal Dimos
Language: eng
Format: epub
Publisher: Zondervan
Published: 2015-12-01T00:00:00+00:00

CASE STUDY SEVEN

CREDIT CARD ABUSE

THE CHIEF FINANCIAL OFFICER (CFO) handed the business credit card to the new employee with a strict warning: “This is not a license to spend money indiscriminately. We have strict controls over the use of credit cards in our organization. This credit card is provided as a convenient way to make purchases; but those purchases must be approved in your departmental budget, and you must turn in receipts for each and every transaction. We have additional requirements regarding use, approval, and documentation in our policy manual. I expect you to read it and comply.”

Fortunately, the CFO required all employees to follow the established policies. When the monthly credit card statement was received, all employees were expected to attach receipts, identify the business purpose of the expense, and note the appropriate account to charge the expense to. The accounts payable (AP) clerk was empowered to follow up with any employee who didn’t follow the established procedures. That is, every employee except the CFO.

Over the years the AP clerk noticed that while all employees attached their receipts to the credit card statement, the CFO would place his receipts in an envelope and seal it before giving it to the clerk. The clerk was instructed to post all employees’ expenses to the appropriate ledger and pay the monthly bill. However, the CFO stated that he would post the expenses for his own activity.

It seemed appropriate to her that the CFO would want to take an interest in the financials and post some of the activity. But now, as she scanned some of his activity, she became concerned. Many of the expenses didn’t seem appropriate for their organization, and other employees didn’t make similar purchases. She dismissed her concern by thinking, “Surely, the CFO would know what expenses were appropriate or not.” However, the charges continued for several months, and the CFO continued to submit his receipts in a sealed envelope. The AP clerk continued to file the envelope away and make the payments. While her suspicion was growing month after month, she continued to dismiss it.

As the AP clerk reviewed the current month’s credit card bill, her heart sank. The CFO had made a purchase that was clearly not business-related. Furthermore, the transaction was not appropriate for an employee of this nonprofit organization, let alone the CFO, who was also a minister. She knew it was time to let someone else know about her concerns.

As the AP clerk explained her concerns to the president of the organization, she showed him the CFO’s credit card statement. The president confirmed that many of the transactions were not appropriate. He was surprised that the CFO sealed his receipts in an envelope while all others were expected to attach them to the statement; however, he admitted that he didn’t require the CFO to submit his purchases for approval. Together, they reviewed the statements for the past twelve months. The president verified that multiple transactions each month were not appropriate and decided it was time to confront the CFO.

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