What internal controls might have prevented a former Smucker employee from stealing $4.1 million over 16 years? Original blog posting (November 4, 2014)

Smucker In October 2014, former Smucker employee, Mark Kershey, charged with defrauding the J.M. Smucker Company for more than $4.1 million over 16 years Kershey was chief airplane mechanic for Smucker at the Akron-Canton Airport

Fictitious invoices Kershey billed Smucker for non-existent parts or work he performed as part of his salaried duties Kershey could approve any invoices under $10,000 The few invoices above $10,000 were approved by his supervisor based on trust

PO Box used for invoicing Kershey set up a post office box in the name of Aircraft Parts Services Co (APS), which was a fictitious company Invoiced Smucker using non-sequential invoice numbers Kershey bought two airplanes and paid for personal residence with funds

3 checks were not cashed Scheme began to unravel when three checks to APS were not cashed Clerk at Smuckers questioned Kershey FBI investigated and charged Kershey

Question 1 What internal controls could have been used to prevent Kershey from carrying out the false billing scheme?

Question 2 What factors might have contributed to the weak internal control environment that allowed this scheme to exist for 16 years?

Question Recap What internal controls could have been used to prevent Kershey from carrying out the false billing scheme? What factors might have contributed to the weak internal control environment that allowed this scheme to exist for 16 years?

For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at http://accountingintheheadlines.com/ Related video resources can be found at http://www.youtube.com/user/accountingheadlines Questions or comments? Contact Dr. Wendy Tietz at wtietz@kent.edu