A controller recently left the employ of a clients after five years of service. This person brought a great deal to the company during her tenure. She improved reporting, created systems that improved communications, and saved thousands of dollars in insurance costs. She was considered to be a real asset, and they knew that finding the right replacement would be a challenge. But what they discovered in the 30 days following her departure was completely unexpected!
Within two weeks of the new controller arriving numerous issues began to surface. Government reports had not been filed, payroll taxes short paid, and suspended licenses to name a few. As the alarms went off and suspicion rose, the owner started digging deeper with the question in mind “where else has she not been getting her job done; what else was she lying about?” As the search unfolded, they did indeed find more issues and a misappropriation of funds. The sense of disappointment at this breach of trust, and feeling of betrayal mounted daily. They were devastated! How could this have happened? What had they not been paying attention?
The answer was simple… trust, but verify. Have controls in place, and a system of checks and balances. Here are some of the systems the owners have put into place to prevent this from every happening again:
- Credit cards must be paid by a check, and are no longer paid on line with a transfer
- All government notices that come in the mail are directed to the owner prior to being opened.
- Quarterly payroll reports/payment and bank reconciliations are reviewed and verified by a third party
Maybe these suggestions as well as this article How to Spot Accounting Fraud can prevent this from happening to you. Clarity about what’s going on in your business can give you the confidence and peace of mind to know you can trust your accounting staff.