SENSATIONAL FRAUDS

Northern Advocate, 16 November 1929, Page 14

SENSATIONAL FRAUDS

AUDITOR’S DISCOVERIES

WHAT ID. ERROR REVEALED,

How some sensational crimes have been discovered by the prosaic task of auditing is revealed in an interesting article written for the Alel-bourne “Herald” by Air James Ferguson, who has been in the Audit Ofhee of tlio Victorian Government for °*;i vea rs.

Air Ferguson’s discovery of one ■rime in which the Melbourne University had been defrauded of £23,000 was due to the fact that there was an error of one penny in an entry concerning £IOOO.

Air Ferguson writes: —In 1001 I went up to the Melbourne University to make the annual audit of the hooks. The accountant there said to me, “I'd make you a. sporting offer. IMI give con £1 for every mistake you find in my hooks.” As a joke I accepted his dfer, little dreaming of the sequel. On going through the accounts I found that the entry coneerning a legacy c! £IOOO had an error of one penny M had, been entered on the credit side inRead of the debit.

Said I, ‘‘Here’s one pound you owe me.” The accountant explained that that penny was the interest for one day on £25, and admitted the error in posting with a laugh. But that error made me suspicious. On trying to reconcile the bank balance with the cash book, there seemed .to be a discrepancy and the accountant asked me to credit him with £sk odd which, he said, the Treasury owed him. Next morning we went together to the Treasury, where we found the disputed amount had been paid three months previously. X verified this at the Audit Office, and found the receipt there signed by the accountant himself.

For a week I whs engaged, working late into the night, trying to effect a balance. Before this I had sent to the bank to get a certificate of the debits and credits of the various University accounts for comparison with the University books. Coming back from lunch I found the certificate waiting for me in a scaled envelope. It tallied perfectly with the books, but somehow I was not satisfied. It transpired afterwards that during the lunch hour the accountant had opened the letter, falsified the certificate, and reseated the envelope, but I knew nothing of this at the time. On the following Alonday the accountant did not turn up, but I had clear evidence of fraud. I called on him at his home, where he was ill in bed. While we were talking I noticed tiu> university bank-book on a whatnot, and as I had left that bank-book securely locked in a safe at the university, of which, I believed, I held the only key, I was, to .say the least of it, somewhat surprised. I took the pass book to the bank, and there found that it had never been issued by the hank —where it had come from I don’t know—and its figures in no way tallied with the bank’s ledgers.

After three months' investigation the whole fraud was revealed; the total deficiency was more than £23,000. And the accountant, had offered me a pound for every mistake! He never •mid mo, hut he paid the penalty of his sins.

I think he was the coolest customer, up to a point, that I have met. The Government being a contributor to the funds of the university, it was necessary that the accounts should be audited each year. That accountant had been for HI years in his position at the university, and every year he succeeded in bluffing the auditor by Vis cheery, breezy manner. Even when he was bowled out the university authorities were inclined to regard the apposed defalcations as merely a aeries of clerical errors. It was difficult to make them believe that their 'rusted officer was a crook.

Yet ho '/as only drawing £SOO a year, and Ins lavish mode of living was widely discussed; if it bad not been for that mistake of a penny! One comes across pitiful cases at times. Many years ago I found that a woman official—quite a girl she uas —was manipulating the postal notes. Rhe was infatuated with a local tradesman, a young scoundrel, who had 7 induced her to pilfer to supply his needs. Tusticc was tempered with mercy in her case, but the scoundrel who induced her to steal could not he touched.

I recall a curious case at an impoitani country town, long ago. T noticed in the Government ‘‘Gazette” that a certain block of land had reverted to the Government because the owner had failed to pay £+2 required by the Lands Department. Knowing the man, I communicated with him to ask what was wrong. He produced his receipt, signed hv the local postmaster, who was also receiver and paymaster, handling nearly £40,000 a year of Government money. What is more, the postmaster admitted the genuineness of the signature as being his own, and could only say that he had boon drinking heavily at the time. He was tried and sentenced and went to gaol.

Then an amazing thing was discovered. One of the messenger boys in the office was a second Jim the Penman. who could forge anyone’s signature.

After all, I have come to this conclusion. The youth who blurts out a bad excuse can be safely left in /■barge of the petty cash, but the one who'invents a good one wants watching.