Bookkeeper theft: how to spot it
25 Feb 2014

Bookkeeper theft: how to spot it

With all the technology around today, businesses are more susceptible to theft than ever before. When bookkeepers and accountants have access to your key financial information, without the proper oversight and control, theft can easily happen without you knowing. Here are the top 10 ways a bookkeeper can steal that you should be aware of so you can protect your finances.

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1. Petty cash accounts

Petty cash accounts are the most common area for theft, but have the least impact unless you keep a lot of cash on hand with little security. These accounts are often used for ad-hoc purchases such as lunch or small cash bill payments. If you aren’t paying close attention to the accounts in-flow and outflow, it can be very easy for your bookkeeper to take small, but regular amounts of money which will add up over time.

2. Invoices

Depending on how many vendors you work with, false invoices can be a wide open door for theft. A false invoice is one that is created to divert funds to an entirely different entity that never really provided any goods or services. The entity may have also been falsely created for this purpose and even have its own bank accounts in which it would deposit your money.

This can occur between an existing company, such as a contractor company or supplier that has a relationship with your bookkeeper who manages your finances. Unless you review all the details of every transaction, you will never know.

3. Credit/debit cards

Another common source for theft is the misuse of company credit and debit cards. Does your bookkeeper have access to your company’s credit and debit cards? If so, they might be the only ones seeing the statements every month, entering the summary information into QuickBooks and making extra charges that you are unaware of.

It is important to review all credit and debit card statements. Because of a bookkeeper’s exclusive access to these files, they could easily be charging money to your account without you ever knowing it.

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4. Cash payments

Cash payments are also risky. If your tenants sometimes send in cash for rent instead of a check or money order, you are inviting the bookkeeper to help themselves. If the bookkeeper has access to the records and can change or alter them, then any cash sent in can be seconded and the audit trail covered up.

Furthermore, if the person receiving the cash payments is also the one who maintains the records and makes the bank deposits, it’s not hard for them to walk away with the cash and create a false audit to cover it.

5. Bank statements/access/deposits

If you have one person managing all your bookkeeping, you could also be exposing yourself to risk. There are a number of steps that have to be followed in the bookkeeping process and if you have someone who manages the entire process, it is not hard for them to divert funds to themselves through cash, direct deposits, payroll and more without you ever knowing.

6. Cash registers/access

Do you keep track of the checks you write? Checks are another easy access for theft. By simply taking a check from the bottom of a stack of new checks, someone could write a fraud check and have it easily go unnoticed.

7. ACH

Your bookkeeper probably knows more about your banking records and systems than you do. Once they know just a few simple numbers — your social security number, DOB, and certain bank account numbers — they can basically do whatever they want with your money.

Your bank account and routing numbers are all that is needed to have checks printed up. The chance of them getting caught eventually is pretty good; however, the chance of you getting your money back is not. You could end up spending a ton of money, well above the original amount stolen just trying to recover it.

8. Bill payment

There are many different ways to pay bills — electronically, cash, checks, just to name a few. Any one of these methods is an opportunity for theft. Since you may be paying numerous bills with different vendors each month, particularly if you are managing contractors and builders, it can be nearly impossible to keep an eye on every transaction.

If you are not in control of the bills you are paying each month, then you will not know if an extra bill or two is getting put into the “paid” pile by your bookkeeper.

9. On-line purchases

You may purchase various items for your properties every now and again online. If your bookkeeper has access to your accounts, then they have the ability to order “extra” goods that they can sell or trade to make a profit. When you look at the credit statement at the end of the month, all you will see is stuff you normally order and you may not be paying attention to the quantity or dates.

10. Payroll

Have you checked your payroll lately? Your bookkeeper could be changing the math on his or her own pay, or in some instances if you have a lot of employees or a lot of turnover, they may very well have a friend or relative on the payroll who has never worked a day for you. This is more common than you might think.

The goal of every real estate investor is to make money, not lose it. When your financial information is in the hands of others, knowing these ways to spot bookkeeper theft will help you to maintain control and become more aware of your finances. For more tips on managing your bookkeeper and accounting, you can visit smartbookscorp.com and download the free eBook.

Photo by: s.jrod26.