Fraud Prevention Alert—Safeguarding Signature Mechanisms

The unauthorized use of signature mechanisms can lead to the theft and misuse of public monies. In fact, we recently issued a report detailing a fire district employee’s misuse of signature stamps resulting in that employee embezzling nearly $1.8 million dollars of public monies. This employee was indicted on 25 felony charges. However, effective controls over signature mechanisms could have helped prevent this embezzlement. This alert outlines how public officials can help protect public monies and deter and detect fraud by developing and implementing policies and procedures regulating the use of signature stamp mechanisms; restricting the use of these mechanisms to the person whose signature is represented; and ensuring the appropriate segregation of duties for those employees who have access to these mechanisms.