Hiring a competent person to keep your books makes good business sense and in some cases is required by law. Not only do they bring a skill set to the business that keeps costs in line, they can offer a snap shot of the financial health of the company, suggest strategic moves, and create company policies and procedures to track cost more efficiently. They help the company maximize profits as much as possible, using every tactic they can to make a dollar out of 15 cents. They’ll suggest shortcuts like using Groupons to make purchases of office supplies, and for purchases from stores like Home Depot if they know a 40% discount will help the bottom line. The very skills that make a bookkeeper so valuable are the same ones that can be used against you if the person has ulterior motives. The news if rife with stories of bookkeepers who have stolen thousands, even millions of dollars from companies by falsifying records, setting up bogus accounts or submitting fake time sheets, as one bookkeeper did to her undoing.
Bookkeepers steal your money because they can. In fact, a study found that one-third of students at a business school said “yes” when asked if they’d be willing to take a chance at netting $100,000 even if they knew there was a chance of going to prison after getting caught. There are a number of reasons bookkeepers give for embezzling money from contractors or employers. In the case of the time sheet cheat, she faced a messy divorce and had no money for her children’s school fees. Taking advantage of a lax supervisor who signed practically anything she put before him, he signed off on time sheets for an employee from a temporary agency for weeks after the employee had been let go. At the time, the bills from the temp agency came to the bookkeeper, and no on in the departments saw them or approved them. She got caught when the temp agency noticed the irregularity in the number of employees they had sent and the higher number the company was paying them for.
Unfortunately, many bookkeepers are never prosecuted because the fraud is considered a victimless crime. With advanced technology, cheating is getting harder to do. It behooves the company owner to be diligent and prevent fraud by keeping an eye on the checks that are written and signed, keeping separate accounts for payroll and other expenses and balancing your petty cash drawer if you have one.