New schemes never cease to amaze me. The resurgence of old schemes is even more interesting.
The Pilot Frixion pen series are marketed as erasable gel pens. Other pen makers may offer similar pens. For certain applications, these pens are great. Make a mistake while writing, simply rub away the error, and re-write it correctly.
Accounting, finance and bookkeeping departments are not appropriate locations to be finding individuals using these pens. The reason is obvious – once a check or other important document is written, it can be easily changed subsequently, as the ink is erasable. Hopefully I am writing the obvious.
However, even though I brought and tested these and similar pens, I failed to read the fine print, and also failed to identify that the same ink can be hidden (disappears) with temperature. The ink in these pens are heat sensitive. As little as body heat can cause the ink to go transparent, removing all visible traces of the original writing.
How does this relate back to a significant risk within accounting? An individual writes out a manual check using these pens. The check is presented to the authorized signer for signing. Once signed, the check is warmed up (put into one’s pocket), leaving only the signature. Then the check can be re-written or even typed out, replacing what was originally written manually. The signature is still valid, but the payee and amounts have been fraudulently changed. What was a check to petty cash for $200 now reads payable to the individual for $5,200.
I also learned cold temperature brings the original ink back to visible status. Take the same check that was warmed up, and put it into the refrigerator. The original ink comes right back.
To best protect yourself from becoming a victim of fraud or embezzlement, you should be aware of these types of products and risks, and watch for things like these pens, to ensure they never show up on your employee’s desks.
The best way to detect if such a scheme was being perpetrated would be to have the authorized signer review the bank statements and canceled check images each and every month, looking for any checks not familiar to the signer. If your bank doesn’t return printed images of your canceled checks, request they do so.
Complacency will cost you in the end.