How to Keep Your Bookkeeper from Robbing Your Business Blind. Jen Deal CPA (252)

Transcription

1 How to Keep Your Bookkeeper from Robbing Your Business Blind Jen Deal CPA (252)

2 Bio: Jen Deal, CPA (FL) (NC) Born & raised in Florida Empty-nester, moved to NC Jan to be near family CPA since 2002 Master s in Taxation (2001) Bachelor s in Accounting (2000) Worked with small businesses since 1999 Worked as a income tax preparer since 1998

3 Definitions

4 Bookkeeper # 1: Creative Karen

5 Bookkeeper # 1: Creative Karen

6 Bookkeeper # 1: Creative Karen Problem: Bookkeeper used company credit card to pay for hotels for her vacations, clothes and other personal items Prevention Do not give your bookkeeper a means (credit or debit card) to make purchases Detection Business owner reviews credit card statements (especially the ones right after the bookkeeper s vacation!)

7 Bookkeeper # 1: Creative Karen Problem: Wrote checks to herself Wrote a check for more than $6,000 to pay a company for silver bullion bars Prevention Control checks Bkkpr should NEVER be allowed to sign company checks Two Signatures Detection Review cancelled checks Know your vendors

8 Bookkeeper # 1: Creative Karen Problem: Largest amounts were stolen through payroll system: Bookkeeper would record appropriate amount in payroll ledger, but would transfer more than that into her account Prevention Business owner handles payroll transfers Detection Business owner should reconcile bank accounts at least monthly

9 Bookkeeper #2: At-it-again Anne

10 Bookkeeper #2: At-it-again Anne Problem: Prior conviction Prevention: Run a criminal background check

11 Bookkeeper #3: Larcenous Lucy

12 Bookkeeper #3: Larcenous Lucy

13 Bookkeeper #3: Larcenous Lucy

14 Bookkeeper #3: Larcenous Lucy Problem: Bookkeeper purchased consumer goods, to pay personal bills, and to take trips Bookkeeper opened an unauthorized debit card Prevention Carefully set up bank accounts so that only authorized persons can make changes Detection Review debit transactions of bank statements

15 Bookkeeper # 4: Taking Tom(linson)

16 Bookkeeper # 4: Taking Tom(linson) Problem: Believing that someone wouldn t steal from children Providing opportunities for someone to steal by relying on auditors Prevention Require bookkeepers to take vacation Do not allow them to take work home Rotate bookkeeping responsibilities Detection Conduct regular, as well as random audits Auditors will tell you that they are not responsible for finding fraud If they find it, it will be by chance Do not rely on audits to find fraudulent activities Have your books audited regularly because it is a deterrent to theft

17 Bookkeeper # 5: Absconding Amanda

18 Bookkeeper # 5: Absconding Amanda Problem: Amanda was an Accounts Payable Supervisor, meaning she was entrusted with paying the company s bills Prevention: Audit expense reports regularly Backup financial records daily Review payment documentation Detection Investigate vendor complaints or statements with aging balances

19 Bookkeeper # 6: Misappropriating Mathis

20 Bookkeeper # 6: Misappropriating Mathis

21 Bookkeeper # 6: Misappropriating Mathis

22 Bookkeeper # 6: Misappropriating Mathis Problem: Use of cashier checks Prevention: Be sure all checks, purchase orders and invoices are numbered consecutively Voided checks, purchase orders and invoices should be kept, not destroyed Have a system to track whether any are missing Detection An annual audit, or even a review, would be reasonable way to safe guard the organizations assets

23 Bookkeeper # 6: Misappropriating Mathis Problem: Endorsed checks Prevention: Checks received should be endorsed with a stamp that says For Deposit Only and contains the company s account number

24 Bookkeeper # 7: Beguiling Beth

25 Bookkeeper # 7: Beguiling Beth Problem: One person trusted to write the checks, sign the checks, keep the records and reconcile the accounts Prevention Do not allow a single person access to all parts of the finances Divide duties among several individuals Detection Compare vendors statements to your records

26 Bookkeeper # 8: Deceptive John Doe

27 Bookkeeper # 8: Deceptive John Doe

28 Bookkeeper # 8: Deceptive Jane Doe Problem: Falsified financial statements Prevention Ask the bookkeeper, or someone else with access, to print out financial statements monthly Require the bookkeeper to provide a bank statement to accompany financial statements Detection Read the financial statements and compare the checking account balance in the financial statements to the balance on the bank statement

29 Bookkeeper # 9: Shifty Sherry

30 Bookkeeper # 9: Shifty Sherry

31 Bookkeeper # 9: Shifty Sherry Problem: The board did not scrutinize the bank statements Prevention Look at the bank balance according to the bank statement.

32 Bookkeeper # 10: Hijack Hicks

33 Bookkeeper # 10: Hijack Hicks Problem: Funds are skimmed before the reach the bank Prevention: Don t give bookkeeper cash, just amount Count the funds before you hand them to the bookkeeper Two people should count cash and sign off Detection: Compare expected deposit amounts to actual deposit amounts

34 What have we learned? Female Middle-aged More-than-one type of theft Long-term trusted employee So What can we predict that Deceptive John Doe might look like?

35 Update on Deceptive John Doe On September 20, 2016, Sally Kirby, 61 of Essex Junction, was sentenced in US District Court to 15 months of imprisonment on a federal forgery charge She will also serve three years of supervised release and pay restitution of $178,000 She was hired as the Director of Finance in 2004 for Hunger Free Vermont Her duties included payroll, accounts payable financial statements and grant allocations

36 Update on Deceptive John Doe She embezzled about $165,000 between June 2009 and September 2015 She did that primarily by issuing HFV checks to herself w/out authorization then forged the signature of the executive director on the checks She altered the entries in the accounting system to make it appear as though the checks had been payable to vendors

37 Criminal Background Checks Pre Employ: mybackgroundcheck.com GoodHire.com BackgroundReport.com HireRight.com