Mailroom Fraud and Internal Control

Sarat Sethi, a professional criminal, took a job as a mail- room clerk for a large department store called “Benson & Abernathy and Company.” The mailroom was an ex- tremely hectic work environment consisting of forty-five clerks and one supervisor. The clerks were responsible for handling promotional mailings, catalogs, and interoffice
mail, as well as receiving and distributing a wide range of outside correspondence to various internal departments. One of Sethi’s jobs was to open cash receipts envelopes from customers making payments on their credit-card bal- ances. He separated the remittance advices (the bills) and the checks into two piles. He then sent remittance advices to the Accounts Receivable department, where the cus- tomer accounts were updated to reflect the payment. He sent the checks to the Cash Receipts department, where they were recorded in the cash journal and then deposited into the bank. Batch totals of cash received and accounts receivable updated were reconciled each night to ensure that everything was accounted for. Nevertheless, over a one-month period Sethi managed to steal $100,000 in cus- tomer payments and then left the state without warning.
The fraud occurred as follows: Because the name of the company was rather long, some people had adopted the habit of making out checks simply to “Benson.” Sethi had a false ID prepared in the name of John Benson. Whenever he came across a check made out to “Benson,” he would steal it along with the remittance advice. Sometimes people would even leave the payee section on the check blank. He stole these checks also. He would then modify the checks to make them payable to “J. Benson” and cash them. Since the accounts receiv- able department received no remittance advice, the
end-of-day reconciliation with cash received disclosed no discrepancies.
This seems like a foolproof scheme. Why did Sethi limit himself to only one month’s activity before leaving town?
What controls could Benson & Abernathy imple- ment to prevent this from happening again?