CHAPTER 44

Hennessy called auditing expert Joan Watson next.

Watson was in her fifties and was aging gracefully. She moved with effortless movements, had an inviting smile, and kind eyes. Dressed in a black skirt with a pink shirt, she presented an image of class, sophistication, and intelligence.

“Mrs. Watson, thank you for testifying today,”

Hennessy said as he stood behind his desk to ask his questions. “Can you please state your full name, qualifications, and experience in auditing and fraud detection?”

“Certainly. My name is Mrs. Joan Sarah Watson, and I have an MBA with a concentration in accounting that specialized in auditing, forensic accounting, and fraud detection. I received this MBA from the University of South Carolina and I’m also a Certified Public Accountant. I’ve lectured on the auditing process for the University of South Carolina and consulted on the auditing process for several businesses. I’ve testified in twenty-five civil and criminal cases where there have been questions about auditing, accounting, or reports.”

“Have you reviewed the reports and financial practices of the Wolfgang Berger Foundation?”

“That’s correct.”

“And have you reviewed the reports and financial practices for Palin Accounting?”

“Yes, I have.”

“As an expert in auditing, what are some common mistakes or discrepancies you typically see in accounting systems?”

“Typically, the most common errors are incorrect report details, incorrect filing of financial transactions, and incorrect money transfers. The possibility of these errors can be reduced by ensuring the businesses have stringent review policies and approval processes.”

“Did the Foundation or the accounting firm use any review or approval processes?”

“No. No review process was implemented by any of the senior staff in either organization. Frankly, the accounting firm was one of the most careless businesses I have encountered.”

Hennessy checked his notes, ran his finger over the next question, and continued. “In your auditing process, did you find that any other individuals besides the defendant had access to the Foundation’s financial accounts or authorization to make a transfer?”

“Yes. The two most senior staff in Palin Accounting had equal access to all statements, reports, and bank accounts.”

“And the names of the two most senior staff?”

“Mr. Bernard Palin and Mr. John Tilly.”

“In your audit of the business, was it possible to see who performed each transaction?”

“No. The access given to Mr. Palin and Mr. Tilly was under one login. It was impossible to tell who made the transfer. The only thing that was clear was the transfer was made by a senior member of the staff at Palin Accounting.”

Hennessy looked at Garrett and then back at the witness. “In your expert opinion, do you believe the evidence supports the prosecution’s conclusions about the defendant’s involvement in the alleged fraud?”

“There’s no evidence in the auditing process that supports the assumption that Mr. Palin, and Mr. Palin alone, made those transfers. There’s simply no way to distinguish between Mr. Palin and Mr. Tilly in the reports.”

“And in your expert opinion, is there sufficient evidence to conclusively prove that the defendant acted with fraudulent intent?”

“No. There’s nothing in the reports or transactions that support this conclusion.”

“Thank you, Mrs. Watson. We have no further questions.”

Hennessy sat down, and when invited by the judge, Garrett conferred with his assistants for a moment. He then began the cross-examination seated behind his desk. “Mrs. Watson, do you believe it’s the responsibility of an accounting firm’s owner and managing director to implement strong internal controls to prevent fraudulent activity?”

“Yes. I believe it’s the responsibility of the managing director or owner to implement best practices.”

“And as managing director and owner of the accounting firm, did Mr. Palin do this?”

“No, he did not.”

“Would you agree it would be Mr. Palin’s responsibility to have safeguards and processes that protect the funds entrusted to them?”

“I agree with that statement.”

“And would you agree that the absence of these safeguards significantly increases the likelihood of fraud?”

“Yes. I would agree with that.”

“In your professional opinion, if an accounting firm lacks these safeguards, does it make it easier for individuals to conceal fraudulent actions?”

“Yes.”

“And do you believe that it’s reasonable to assume Mr. Palin was responsible for ensuring these safeguards exist?”

“Yes.”

“And is there any evidence to support the fact that it was someone other than a senior member of Palin Accounting who made those transfers?”

“No. The evidence clearly points to a senior member of Palin Accounting making those transfers.”

“That’s what I thought,”

Garrett noted. “No further questions.”