Reposted from the This Week in Nonprofit Fraud Blog – July 21, 2014
July 15, 2014: Jared Harrison was sentenced this week to 6 to 23 months in prison on charges of receiving stolen property. Harrison would receive and cash checks written to him from Ryerss Farm for Aged Equines, a nonprofit specializing in the care for aged, abused or injured horses. Harrison was the boyfriend of Sarah Barnshaw, the farm’s financial controller, who was defrauding the organization by writing checks to him that claimed to be for farm expenses like hay and horse feed. Between 2010 and 2011, she wrote 18 checks written out to Harrison and deposited in his bank accounts. In 2012, Barnshaw was fired due to performance issues relating to paying the organization’s bills on time. Soon after, a review of the financial records showed severe irregularities. It was soon discovered Barnshaw defrauded the organization of nearly $45,000 during her employment at Ryerss Farm, through the aforementioned checks and misuse of credit cards. Barnshaw used the funds to give herself cash, pay bills, open credit cards and splurge on clothes and electronics. She is currently awaiting trial on similar charges.
See more on this case at Daily Local News
- Segregation of duties is critical, even in small organizationS. As the farm’s controller, Barnshaw had the ability to add new vendors, and issue payments to those vendors, which provided a perfect opportunity for her to steal funds.
- Sometimes, budget reviews can help discover fictitious vendors. Since Barnshaw was supposedly buying hay and feed with the checks she was writing – this would have caused a suspicious spike in inventory costs above what was budgeted, which could have revealed the fraud (if anyone was looking).
Raffa Forensic Practice Tips:
- A fraudster is always someone you know and trust.
- Regardless of the size of your organization, segregation of duties is a necessary control to prevent fraud. Instituting a policy requiring multiple signatures on checks over a certain threshold also helps aid in disbursement fraud prevention.
- Does your organization have a vendor approval process that is segregated from those that have the authority to issue payments?
- Does your organization have budgeting procedures, and do you review your actual performance against the budget to look for anomalies?
DON’T BE THE NEXT VICTIM OF FRAUD!
The Raffa Forensic Accounting Services Practice offers a wide variety of fraud prevention and detection services including Fraud Risk Assessments, Background and Workplace Investigations, Fraud and Internal Investigations, Transactional Due Diligence Investigations, Anti-Fraud Consulting and Training, and Computer Forensic Analysis.
For more information on the Raffa Forensic Accounting Services Practice please visit us at www.raffa.com/ProfessionalServices/Forensic/ and the Nonprofit Fraud Prevention Institute at www.raffa.com/Fraud.
You can also contact the following Raffa professionals with any questions or if your organization needs assistance in fraud prevention: