Is it time for a new bookkeeper?
I was recently asked to assist a small company with their 2014 QuickBooks file to get it ready for their accountant. They had a full time bookkeeper and have been in busienss many years. I was in their QuickBooks file for less than 3 minutes when I discovered a few unusual "transfers" from teh bank account. Their bookkeeper had moved money from their company bank account to her personal PayPal account but was able to label the PayPal account with one of the vendors that the company also used for PayPal. Unfortunately she had stolen more than $40,000 by the time we caught it. We all trusted her. She seemed like a friendly, honest person. It was hard to believe but she had planned this for a while and was very, very clever in hiding it for almost a year.
Are you too trusting of your bookkeeper? Unfortunately people will steal if given the opportunity and the motivation to do so. Always conduct background checks and reference checks before hiring a bookkeeper. It is important that small business owners are aware of the signs of fraud in order to prevent it ro recognize it if it occurs.
Warning danger signs:
- Has your bookkeeper asked for signature authority on your checks?
- Does your bookkeeper make telephone or online transfers from your bank accounts, credit lines or PayPal accounts?
- Does your bookkeeper's lifestyle seem inconsistent with their earnings?
- Does your bookkeeper frequently take records home to work on, or work in the office when no one is around? (Fraudulent activities are more easily accomplished when no one else is around.)
- Does your bookkeeper seem resentful or get defensive when you or your CPA ask questions?
- Do you receive tax delinquency notices that the bookkeeper explains away as government error?
- Does your bookkeeper insist on handling activities for which other departments are normally responsible? These might include picking up the daily mail (for fear something could arrive that would tip off management), acting as the sole go-between with the company's financial contacts (banks, auditors, creditors, etc.), and working with police when items or money are missing?
- Does your bookkeeper continually misfile important items such as payroll receipts, deposit records or vender invoices?
- Do your deposits sometimes seem too small? Owners should always carefully monitor income and deposits, comparing sales receipts against actual amounts put into the bank.
- Does your bookkeeper show signs of a drinking, drug, or gambling problem, or family financial problems?
- Has your bookkeeper suggested replacing or getting rid of the outside accounting or bookeeping firm, saying they can handle the duties of the independent accountant and "save the company the added expense?"
If you want an independent audit of your books for peace of mind, please call our office to arrange an appointment: 423-668-6020