You see, I was very concerned that when I handed over the business books to the accountant this year, I would be busted – caught – nailed to the wall. I was sure I’d be in Shawshank before long, and I was almost tempted to clean up my act – almost. I was sure I was cooked when the accountant called me a couple days ago and asked for the bookkeeping program’s “Accountant backup.” How could the accountant NOT see at an instant that I’ve been embezzling from the company for months now, especially when they have completely access to everything I’ve done?
But I got lucky.
Turns out, the accountant only wanted the backup of the program so that he could enter the usual accountant adjustments like depreciating the assets, updating interest balances, and adjusting the Cost of Goods Sold account. And thankfully, most of that information was updated from the reports that I created for the accountant’s perusal.
Still, it was a long couple of days as I waited for the Accountant’s copy to be returned.
And then the wait was over. The accountant copy was back and the accountant had praised me to the boss. He went so far as to say that I “kept a clean set of books.”
The boss was so happy, he gave me a raise.
I never thought I’d say it – but I’m glad the accountant looked at the books. I can’t wait until next year. I’m thinking, maybe I’ll create a second set of books… just in case the accountant ever decides to look closer.
Why the Accountant Did NOT Catch the Embezzlement
This is a concern I hear from a lot of business owners that were embezzled from. Even more often, I hear business owners that have NOT been embezzled from telling me that they are NOT worried about embezzlement because “they have an accountant.” Both types of business owners usually believe that when they hand over their books at the end of the year, the accountant is automatically going to look deeply between the lines and spot anything suspicious.
FINDING EMBEZZLEMENT IS NOT THE ACCOUNTANT’S JOB… not unless they’re asked.
During tax time, accountant’s are bombarded with books from various businesses. They have a very limited amount of time to do everything from sending out tax forms to making adjustments to various accounts. In other words – tax time is an accountant’s “busy season.” They often have a preset list of actions to do with any business’s books.
Another Example of Missed Embezzlement
Let me state this another way. Recently, I have been working with a non-profit branch of a company that reports their profits and losses to their “parent” company. Since the company is a non-profit branch (or chapter) and NOT a business that is run in the usual ways, this branch reports does NOT report directly to the IRS or an accountant. Instead, they are sent a questionnaire from the parent company that they have to fill out and send back to the parent company. They are not asked for any backup, which makes it even easier to steal from the branch.
Recently, when I reported to the parent company that I saw signs of embezzlement in this particular branch, the parent company said they would look into the financials. When they looked over the reports that the embezzler made up for the chapter, they reported no signs of embezzlement. They openly admitted that they had to have a closer look at the records and the bank statements in order to verify if their was embezzlement or not. And since the branch (chapter) is not required in the non-profit policies and procedures, the branch could very well go under if a closer look at the books is not performed immediately.
How to Catch this Kind of Embezzlement
The only way for an accountant to catch this type of embezzlement is to have the business owner actually ASK the accountant to look for embezzlement. If the accountant is not asked, they will not look closer. They will go through their preset list of actions and look no further. The other way is to have someone else – preferably another bookkeeper – look more closely at the reports and compare them to the bank statements.
Originally posted 2011-04-19 13:21:44. Republished by Blog Post Promoter