Case No.

4 Module 4

Million-dollar gamblers: A Case of Embezzlement

in South Whitehall Township

MAEC 3 MA 1

Sustainability and Strategic Audit

Case Reporters

Alegado, Gelmein Bill

Oclarit, Heart

Sususco, Princess Niña Layne

October 5, 2021
Background of the study

Nancy and William Tonkin, long-time service providers in South Whitehall

Township, Pennsylvania, have been exposed with their large-scale embezzlement

scheme trying to recover their losses in casinos. Nancy at 67, is a trusted resident and

employee as she had worked as a supervisor for the township for over 30 years. While

her husband, William, was a retired Police Officer and Security Guard in their area. Nancy

handles the utility funds of the township giving her access to incoming resident’s

payments, bank accounts, and accounting records. Leading to the events of the fraud is

the couple’s new addiction to gambling. They lost over $100,000 in slot machines and

accumulated big amounts on other gambling activities. Nancy then started using the

“lapping” scheme to get out of their financial struggle. After the restructuring of their

department, a new employee noticed that $38,000 was missing from the fund. It was then

discovered, after investigation, that the total amount stolen by Nancy added up to almost

a million dollars.

Point of View

We look through the lenses of the taxpayers of South Whitehall Township against

the fraudulent acts made by Nancy Tonkin, along with her husband, William Tonkin.

Statement of the Problem

Despite having a trusted employee like Nancy, South Whitehall Township was not

able to prevent the million-dollar embezzlement due to the lack of internal control

processes.
Analysis of Issues

1. Maintaining Professionalism

They should have maintained their professional status within their

workplace, and this should be acted in ways where the rest of the employees does

not offer all information to Mrs. Tonkin. Mrs. Tonkin is not in the right position to

know all the information even if the organization is small. They should have set

boundaries and made close relationships outside of work.

2. Lack of Surveillance System

Organizations should have a surveillance system to maintain honest work

and to see the progress of their employees. What was wrong in the Township

system is that they have not established clear policies and surveillance systems

making it easier for Mrs. Tonkin to be tempted to commit embezzlement.

3. Evidence of Embezzlement

The employer should have seen the signs of typical inside theft motives.

Such as when Mr. and Mrs. Tonkin have changed their spending habits by

participating in casinos in town is already evidence of a red flag. They should have

already doubted their employee at that.

4. Perform a Risk Assessment

Sometimes it takes an internal incident to bring attention to threats and

vulnerabilities in a workplace. You might think your policies, procedures, and

processes are working fine until an employee proves otherwise. After concluding

investigations, perform a risk assessment. Figure out what changes you need to

make to reduce your risk of further embezzlement (or other internal fraud).
Recommendations

Implement an internal control system that oversee the financial operations

of the South Whitehall Township

As the governing body of the municipality of Lehigh Valley, they should be able to

focus on developing methods for tracking internal elements that could pose a threat to

citizens' financial transactions in the area. They should use these to catalyze and

implement an internal control system that will aid in keeping track of financial transactions

where embezzlement is likely to occur. An effective internal control system significantly

reduces asset losses and ensures that financial transactions are dependable and that the

municipality's activities are in compliance with the law. There are several advantages as

to how effective implementing an internal control system in an organization is. Here are

the following:

➔ Monitor operations of the organizations to ensure maximum efficiency

➔ Ensure that assets are kept safe

➔ Ensure that employees are in compliance with the policies

➔ Ensure that the accounting system is functioning properly

➔ Prevents and detects fraud and other unlawful acts

➔ Completeness and accuracy of financial records

Internal control safeguards the municipality's assets and keeps it from infringing

any regulations, all while accurately recording the company's financial activity in its books.
Accounting records are used to compile the financial statements required to analyze the

municipality's operations, which cover all corporate and personnel actions. Internal

controls include not only reviewing how items are documented in the company's

accounting records, but also comparing the accounting records to the municipality's

actual actions. Hence, it is essentially prevalent to implement an internal control system

that not only monitors personnel but also catalyzes preventative steps for the benefit of

Lehigh Valley residents.

 REFERENCES

Internal controls. Audit & Advisory Services. (n.d.). Retrieved October 5, 2021, from

https://audit.ucsf.edu/internal-controls.

Gorga, A. (2018, September 7). The Benefits of the Internal Audit. Withum,

https://www.withum.com/resources/benefits-internal-audit/

Ann SnookMarketing WriterAnn is a marketing writer at i-Sight Software. She writes

about issues related to investigations of fraud, Snook, A., Writer, M., & Ann is a

marketing writer at i-Sight Software. She writes about issues related to investigations of

fraud. (n.d.). 14 tips for effective embezzlement investigations: I-sight. i. Retrieved

October 5, 2021, from https://www.i-sight.com/resources/14-tips-for-effective-

embezzlement-investigations/

Beaulieu-Volk, D. (2012, August 14). 3 steps to address employee embezzlement.

FierceHealthcare. Retrieved October 5, 2021, from

https://www.fiercehealthcare.com/practices/3-steps-to-address-employee-

embezzlement