Complete 2012 forensic audit documents - Kansas Bioscience ...

With respect to the David Franz double payment, the third issue which potentially contributed to
confusion was the naming convention used within KBA accounting software, QuickBooks.
There are two vendors set up within QuickBooks for Dave Franz, one with the name “David
Franz” and one with the name “Dave Franz.” In this instance, the first check was cut to vendor
“Dave Franz” and the second was cut to “David Franz.” Had there been a single vendor set up
for David Franz, KBA accounting department may have noticed that a payment for $680.36 had
already been processed for Mr. Franz, but since the second payment was made to a different
vendor, from QuickBooks perspective, that fact would not have been so apparent.
The original reimbursement check to David Franz was numbered 679 dated May 30, 2007 and
the second reimbursement check to David Franz was numbered 1029 dated June 21, 2007. Both
reimbursed the same expenses and totaled $680.36. The original reimbursement check to Tom
Thornton was numbered 692 dated May 30, 2007 and the second reimbursement check to Tom
Thornton was numbered 1032 dated June 21, 2007. The original check totaled $2,326.95,
however, it paid multiple of Tom Thornton’s expense reports. Only $1,674.93 of this total was
subsequently paid a second time. The second reimbursement check to Tom Thornton totaled
$9,736.19, which also paid multiple of Tom Thornton’s expense reports. Only $1,674.93 of this
total was duplicative. BKD searched for additional double payments following this same pattern
but noted none. Payment and supporting documentation for each are located at Exhibit 47.
On an expense report covering expenses from January 7, 2008 through January 13, 2008, Tom
Thornton reported expenses charged to his KBA credit card in the “Paid by Employee” section
rather than the “Paid with Company Credit Card” section, resulting in an inappropriate payment
to Mr. Thornton of $1,465. The check number was 1378 and the check date was March 4, 2008.
Payment and supporting documentation is located at Exhibit 48.
Jan Katterhenry was reimbursed twice for $138.29 of expenses she incurred conducting KBA
business; an entire expense report was double paid. She was reimbursed $138.29 on August 1,
2007 with check 1113 and was reimbursed for those same expenses a second time on August 7,
2007 with check 1083. Check 1083 totaled $163.81 which included the $138.29 of expenses
plus $25.52 of new expenses. Payment and supporting documentation is located at Exhibit 49.
Ruth Saale, Interim CFO, believes what caused the double payment related to the procedure in
place at the time for individuals who had both personally paid expenses to be reimbursed by
KBA and incurred expenses on behalf of KBA using KBA American Express card, explained as
follows. At the time, a single form with two sections was used for both types of expenses. The
top half of this form was used to report employee paid reimbursable expenses and the bottom
half was used to report KBA paid American Express expenses. The employee was to fill out
both sections of the form, and then create a copy to be filed with the American Express statement
and a copy to be filed with that employee’s expense report file. BKD notes that no such copy
could be located in the American Express file, and two copies were located in Jan Katterhenry’s
expense report file. This misfiling of the second copy of the expense report may have caused the
double payment to occur. The fact that the checks were for different amounts in different
months may have caused the double payment to go undetected.
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