Business Tips March 1999 - You can spot accounting fraud

You can spot accounting fraud.

Most businesses are subject to theft. Some are especially open to fraud by the bookkeeping staff.

The embezzler may be anyone who is entrusted to handle cash or office paper work. Here are a few telltale signs which may indicate a need for further review. Don't fly off the handle because you spot a couple of these actions on the part of one of your employees. You should consider all relevant factors when investigating possible wrong doings.

If someone is embezzling from your company, they may do some of the following:

1. They are always at the office when the boss is there. They take short lunch breaks away from the office, or no lunch breaks.

2. They are always available and helpful when the boss is looking for any paperwork.

3. They avoid taking a vacation. They consider it necessary to be on the job to head off any questions about office matters.

4. They willingly work after hours and may even take work home with them.

5. They are most willing to pick up the mail. They may even insist on it. They want to get their hands on the bank statement before it is opened by anyone else. Many embezzling schemes will show up in the bank statement.

6. They live beyond their means when it comes to cars, houses, and vacations.

7. They may have a drinking, drug, or gambling problem.

8. They may have family financial problems they are dealing with.

9. They may suggest replacing or getting rid of the outside accounting firm. They say they can handle the duties of the independent accountant and "save the company the added expense."

Most theft is accomplished by the employee acting alone. However, it is possible for your employee to engage the help of one of your major vendors. Your employee may approve invoices for items never delivered. He or she then splits the overpayment with the vendor. Or they join forces with a delivery person who shorts the company a few items from the truck, sells the products, and splits the take.

Even if your company doesn't need a full blown audit of the financial statements, you might benefit from a review of your "internal controls." Such a review determines how the work duties are to be divided amongst the employees to help avoid embezzlement opportunities.

Please give us a call if you would like assistance in this area. We are here to help.

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