| ERROR MSGby John Maynard, Georgia SBDC You would not believe how often I hear from business owners who have been robbed by their office manager or bookkeeper. ERROR MSGA common thread among these tales of thievery is that the bookkeeper had virtual control over the company's checking account and accounting system. The bookkeeper also handled accounts payable, accounts receivable, and reconciliation of the checking account every month. Finally, the business owners had absolute trust in these employees. The owners said they didn't have time to check every financial transaction. In other words, these pilfering bookkeepers were given ample opportunity for larceny and took it. To avoid this type of theft, large companies have different people handle various banking and bookkeeping functions. So how can a small company with limited personnel, such as one bookkeeper, avoid getting ripped off? First, the business owner must follow certain procedures that will deter theft as well as detect it should it take place. Second, the owner should realize that computerized accounting systems can help conniving bookkeepers hide their dirty work. Lastly, the business owner should know the common MOs of these felonious green-eye shades. For example, a bookkeeper might record a check in the company's accounting system to a regular vendor, but write the check to himself, a cohort, or another company established by the bookkeeper. Another method is to record a bill from a vendor, such as the telephone company, for an amount over the actual bill. A check is processed in the accounting system to the telephone company for the inflated amount. But in reality, two checks are hand-written: one to the phone company for the correct amount of the bill and another to the bookkeeper for the inflated amount of the bill. When canceled checks arrive, he destroys the extra check. If the bookkeeper doesn't get greedy, a large amount of money can be stolen this way over a long period of time. boutique luxury hotels GdyniaThe flip side of the inflated bill paying scheme is to create two sets of customer invoices. One invoice would charge a customer an inflated amount. Once this invoice was printed, it would be deleted from the accounting system. Another invoice would be created, charging the customer the correct amount. The inflated invoice is mailed to the customer. The correct invoice stays in the company's accounting system. When the check arrives from the customer, the bookkeeper deposits it while taking the inflated amount of the check as "Less cash received." Business owners could easily detect these illicit activities by reviewing the company's bank statement. To their chagrin, the robbed business owners I've encountered all delegated this critical activity to their dishonest bookkeepers. alberghi a AlbufeiraIt's not enough just to review the company's bank statement. The owner or an employee other than the bookkeeper should be the first to open a bank statement (so that no cleared checks can be destroyed or altered). Being the first to look at the company's daily mail is an important safeguard. A company should use a locked post office box whose access is limited to the owner or an employee other than the bookkeeper. Either the owner or an employee other than the bookkeeper should make a list of checks received each day in the mail (including the check amounts). That check receipt list should be compared with a bank deposit receipt. Finally, deposits should be made for the full amount of a check. In other words, no "Less cash received" withdrawals should be permitted. In addition, the business owner should set up his accounting software to require audit trails so that transactions (such as bogus invoices or bills) can't be deleted. These precautions and procedures will help prevent loss by theft two ways: by exposing the theft when it occurs, or better yet discouraging it altogether because the potential thief knows he will get caught. > See also: Risk Management | 
