Lessons in internal control lapses from major fraud cases

Tammy Thomas, CPA/CFF, CGMA, is a co-author of the most recent FVS Eye on Fraud report, focused on the importance of internal controls preventing employee embezzlement.

In this episode, Thomas breaks down how failures in segregation of duties allowed two major embezzlement schemes to persist for years. She explains how small control gaps and role consolidation can quietly erode an organization's defenses.

Thomas also outlines how deadline pressure and resource constraints can unintentionally weaken internal control environments.

Also, hear the previous Eye on Fraud podcast discussion, about the role of company culture, from July 2025.

What you'll learn from this episode:

• A definition of internal controls and why they function best as a dynamic, ongoing process.
• How weak internal controls and poor segregation of duties can create openings for employee embezzlement.
• Why deadline pressure around the month‑end or year‑end close can weaken internal control effectiveness.
• Practical steps organizations can take to strengthen internal controls, improve oversight, and reduce fraud risk.
• Why Thomas said it was important to remember that "internal control is not a checklist."