Today’s post is based off a sad but very true story. I am currently working with a client that has her own Interior Design business. She started back in 2004 on her own and hired a few office staff to help her manager her bookkeeping. She had industry specific software that she had no idea how to use and trusted that her employees not only knew it, but were being honest. Needless to say, 2 years ago this client found out that she is a victim of hundreds of thousands of dollars worth of FRAUD.
This client called me in because she purchased QuickBooks Enterprise. She decided to re-enter all 5 years worth of data into QuickBooks so she can come up with a true number of how much was stolen from her. She hired some friends and worked with them for countless hours data entering everything. Now that the data is in, she has hired us to double check all of their work. Not only has she personally spent a tremendous amount of time on this, but she has also been forced to hire forensic accountants to work on this as well so she can bring the case to court. We all know that can’t be cheap.
So why am I telling you this? I wanted to point out how important it is to not only know the in’s and out’s of your programs but also have a system of checks and balances in order so this can’t happen to you. I can’t tell you how many clients have no idea how to use QuickBooks. They rely on their staff to know. This is very dangerous. Know your software.
Checks and balances & separation of duties are very important. What I mean by this is your staff should not have access to everything within the software. For example, the person who enters the bills shouldn’t necessarily be paying the bills. If you only have one Accounts Payable person – do not give them authorization to sign checks. This way they can print them, but they have to go to another person for signatures there for allowing mistakes or fraud to be caught. The person that enters the banking transactions should not be the person doing the bank reconciliations. I could go on and on.
Last but not least, OWN YOUR OWN BOOKS! I once had a client that relied on their Accountant for EVERYTHING. The accountant had QuickBooks and would do all their data entry, all their bank recs, etc. One day, the accountant literally fell off the face of the earth and the client was left with nothing. This was a huge problem for them. I’m not saying you can’t use an accountant for assistance. What I am saying is to own your QuickBooks in your office and allow the accountant remote access or send the accountant an accountant’s copy for them to work on.
Don’t open your business to the possibility of fraud. In this day and age, it is very easy to take advantage of a company. Unless you have the right systems in place, it could happen to you.
If you have any questions about this topic or need help setting up any of the systems mentioned, please give us a call.