Frequent Frauds Found in Governments and Not-for-Profits

Chapter 7CASE 7: PERSONAL USE OF PUBLIC ASSETS

LEARNING OBJECTIVES

After completing this chapter, you should be able to do the following:

•     Determine the importance of identifying the environment in which a fictitious governmental organization operates and how the operating environment may affect the development and execution of policies and procedures.

•     Identify capitalization policies and inventory procedures of a fictitious governmental organization.

BEFORE WE START

In many governmental organizations an attitude may be present that encourages personal use of government assets. This may be as insignificant as management tolerating personal use of copiers or as egregious as operating a personal business from the fire station. Such situations may not likely result in material misstatements due to misappropriation of assets. However, such personal use of public assets violates the public trust.

Factors that may contribute to employees using government-owned assets for personal reasons include:

•     Management override — If line employees see management use public assets for personal use, they may rationalize their own personal use of public assets.

•     Inadequately trained personnel — In some cases, employees may not be aware personal use of government-owned assets is inappropriate. This may be especially true of employees who previously worked in the private sector where such behavior is not a violation of the public trust.

•     Lack of personnel — Without sufficient ...