The Case for Better Internal Control in Our Government Organizations
by MAX A. MILLETT Partner, Phoenix Office
Presented before the First Annual Governmental Finance and Accounting
Institute of Arizona State University, Phoenix—December 1961
JUST TWO DAYS before Christmas in 1952 the head cashier of one
of the County Treasurer's offices in our state sat down with the County Attorney, a court reporter, and his boss, the County Treasurer,
and confessed that he had embezzled about $48,500 from the County over a period of three and one-half years. His defalcation had come to light when a taxpayer brought a canceled check to the office to prove that he had paid his property taxes. The Title company
had charged him with the taxes the second time when the property was sold. Christmas 1952 must not have been a very happy holiday for this father, his wife, and five children. He was arrested, tried and convicted, and given a sentence of from five to ten years in the state prison. The bonding company paid part of the loss, but the law required the County Treasurer to make up a substantial portion of it out of his own pocket. A bill was introduced this year in the State Legislature that would give the County Treasurer about $20,000 as reimbursement, but it died in Committee.
In 1944 headlines of local newspapers informed the people of our state that a long-time, respected political figure who had held the office of County Assessor, and two of his key employees, were charged with misappropriating some $56,000 of taxpayers' funds. After reading the court record and the newspaper accounts of the trial it is easy to reach the conclusion that the real total was undoubtedly substantially more. It was an interesting trial. Each of the accused tried to shift the blame to the others, but at the end the jury found them all guilty. The Assessor, who since had been elected State Treasurer, and his cashier, a woman, were sent to jail. His Chief Deputy received a suspended sentence, presumably because he turned state's evidence.
In 1957 it was discovered that another employee, this time the Chief Accountant of one of the state's large agencies, had taken more than $70,000 of state funds during a period of some five years. This defalcation was uncovered in the agency's first full audit in thirteen years. The employee confessed and at the conclusion of his