How NOT to let this happen to you!

If you keep up with the local news, then I am sure you have seen this story:

Bookkeeper Accused Of Stealing Nearly $400,000 From Employer

A bookkeeper for a local company is accused of stealing money by paying her own credit cards with company funds. I’m sorry to say it, but it reminds me of the movie Matchstick Men with Nicholas Cage. The conman’s famous saying is “I didn’t steal it, you gave it to me!” In order for her to steal that kind of money over four years, she had to go virtually unchecked the entire time. All the money was put right in her hands with no accountability!

First off, insurance expert Scott Simmonds has great tips to avoid employee theft.

Second, being in the business of financial management and bookkeeping, I can throw in my two cents to help others avoid this tragedy.

Do an external audit of your company every year with an accounting firm. An external audit would pick up on anything suspicious, so fraud could never last more than a year. As an added benefit, you will also be fully prepared for the IRS should they come knocking.

Insist your bookkeeper provide financial reports and read with a careful eye. If you don’t understand reports, call me. Every business owner should know how to interpret financial statements.

Don’t let your bookkeeper sign checks. Instead, use the bookkeeper to enter the data and produce invoices. Have someone else pay the bills online and sign the checks the bookkeeper prints.

Lastly, consider using a service to do your books (note the conflict of interest here). With a service, you are dealing with a company that carries the responsibility for its own employees and will work directly with you on your finances.

Following these tips insulates you from giving all your company’s money to your bookkeeper. Bottom Line: Never let any one person have total financial control and autonomy. People holding money need to be accountable to someone, or the temptation may just be too great.

Mike Freeman
Bookkeeping and Accounting Services in Maine