MADISON, Wis.-Joette Colletts, regional manager of risk management for CUNA Mutual, offered these "simple steps" to further reduce risk of internal fraud:
* Each teller should have his or her own cash drawer. If there is a shortage, the credit union knows who to talk to about it. Even if the teller goes to the restroom, for those two minutes the teller needs to lock the drawer and take the key along-and the spare key should be secured.
* For the main cash supply, sometimes referred to as vault cash, Colletts said it sometimes is difficult to maintain exclusive control. In that case, she recommends having forced dual control-meaning one person cannot open the vault by himself or herself; two people must go to the vault together as each has half of the combination.
"Collusion by two employees is more uncommon, so having dual control is important," she said. "We also recommend having a camera in place in the vault, but with that said, credit unions should not rely exclusively on a camera because cameras can malfunction or be twisted by someone."
One credit union that consulted with CUNA Mutual Group performed periodic surprise cash counts on teller drawers, but never a surprise count of the vault cash. After a recommendation by one of the company's risk management consultants to the CEO, the vault cash was checked one day. The audit discovered the head teller had shorted the vault cash $40,000 over a period of time.
"Sometimes vital steps slip through the cracks," she said.
* Corporate credit cards should be monitored carefully as they can be misused, Colletts said. Many employees are issued corporate cards for traveling, but all expenses need to be substantiated, approved by a supervisor and examined for personal expenses.
Colletts recalled an instance of a credit union manager who went to Florida ostensibly to attend a conference, but instead turned the trip into a vacation. Not only did the manager fail to make it to the show, he/she later contacted the vendor to request a refund be sent to his/her home.
"If credit unions are spending the money to send people to conferences, they need to make sure it is a worthwhile expense," said Colletts. "They should ask people to discuss what was learned or bring back conference materials."
* Smaller CUs should be especially careful when dependent on individuals to purchase computer equipment. Colletts said the buyer should present all receipts, as sometimes an employee might purchase a desk or a printer and bill it to the credit union, but it instead goes to their house.
"Oversight on expenses is important," she said. "If the person with the company credit card knows no one is looking at the receipts and the statements, or is rubber-stamping the process, temptation sets in. Usually, this starts small and, if not caught, it escalates."
