Last year, I wrote about fraud prevention, specifically as it dealt with a small office with insufficient staff to ensure proper separation of duties. In that office, the same person who received payments was also able to make adjustments, which were not reviewed by anyone else in the office.

A recent newspaper article alerted me to a similar situation, but this one dealt with voided cut-off fees. The North Carolina State Auditor’s Office received a tip on their tipline regarding unpaid cut-off fees, among other improprieties.

Audit report details

Beginning on page 8, the Auditor’s Investigative Report goes into detail about how the cut-off fees went unpaid. In calendar year 2024, the Utility Billing Supervisor fraudulently voided cut-off fees for herself (11 of 12 months), a Town Commissioner, and the Utility Billing Clerk (both 9 of 12 months).

Additional voided fees

The report also states that in 2024, 1,838 cut-off fees, representing 86%, were voided across the customer base. Only 291 cut-off fees, or just 14%, were charged to customers!

To be fair, some of the voided cut-off fees were very likely legitimate. I am very familiar with the billing software in use at this town. It has a feature that will automatically remove customers from the cut-off list by voiding the adjustment if the customer pays after the cut-off batch is created but before it is updated. However, unless the cut-off list was created several days in advance, it’s very unlikely that all of the voided fees were legitimate.

How could this have been avoided?

Just as in the case I referenced above that I wrote about last year, if a supervisor or manager had reviewed the adjustment batch, it would have been evident that a vast majority of cut-off fees were being voided.

Is your business office vulnerable?

Does your business office have potential vulnerabilities that could be exploited by an unscrupulous employee? If you’re unsure, please call me at 919-673-4050 or email me at gary@utilityinformationpipeline.com to learn how a business review could help you find out.

© 2025 Gary Sanders