Donald is a mid level manager in charge of accounts payable for RW Company. Donald’s salary is $200,000, he receives a bonus in the range of $40-50,000 each year, and is generally compensated for his job well above market rates. Recently, Donald is disappointed because he has been passed over for promotion to assistant controller because of his lack of interpersonal and communication skills which are essential for the controller’s job which is at a senior level.
A routine audit of the accounts payable department discovered that five payments approved by Donald were made to a vendor that was set up by a relative of Donald that collected the payments for work that was never performed. Donald approved the payments and the amount of payments were relatively modest, $9,000. Donald was disciplined for the event as the company denied him a bonus for 2017.
You are asked to advise senior management as to why you believe this fraud occurred. How would you explain Donalds’s behavior?
Did the company handle the situation correctly? What better action could it have taken?