The Faithless Employee: A Case Involving the Legal and Accounting Issues Associated with Employee Theft of Company Funds

Abstract

This case explores the areas of public accounting/auditing and business law as they relate to the conduct of an employee who intentionally and unlawfully obtains, and, negotiates for his own benefit, his employer’s negotiable instruments (checks). In particular, this case involves an accountant who unlawfully acquired negotiable instruments, purportedly drawn by the employer and made payable to the accountant as a result of the accountant’s improper use of his employer’s computerized accounting system. Because of his position, his knowledge of the system, and the lack of proper accounting controls, he was able to write company checks to himself and to manipulate the deductions to his paycheck.