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re: Embezzlement and Naive Business Owners
Posted on 3/6/17 at 2:27 pm to Serraneaux
Posted on 3/6/17 at 2:27 pm to Serraneaux
quote:
I don't know how even their CPA firm or whoever filed their taxes never raised a question in 10 years though when doing their tax returns.
IF they were only seeing the books once a year at tax time, and those numbers were pretty consistent from year to year, it's not that hard to comprehend. Especially if the tax return was their only engagement with the client.
2
Posted on 3/6/17 at 2:35 pm to The Spleen
I actually just remembered that the accountant from my previous employer was busted stealing. She got a company CC issued in her name and ran up charges on it. There were about 40 of us with company CC's and the CFO only saw the total bill to Citi and it was always within reason.
She got busted a few months into the theft when one of her purchases was flagged, and she forgot to change the contact person for the bank to call to her. It went to another staff member who blocked the charge and then the company looked into it.
Would have been caught in a few months anyways as our entire CC spends are audited each year.
She got busted a few months into the theft when one of her purchases was flagged, and she forgot to change the contact person for the bank to call to her. It went to another staff member who blocked the charge and then the company looked into it.
Would have been caught in a few months anyways as our entire CC spends are audited each year.
Posted on 3/6/17 at 3:03 pm to The Spleen
quote:
IF they were only seeing the books once a year at tax time, and those numbers were pretty consistent from year to year, it's not that hard to comprehend. Especially if the tax return was their only engagement with the client.
For sure, most of the time, the CPA firms are just comparing year to year expenses and if they are okay with the amounts then they move on. If there is an explanation that makes sense like "expansion" and everyone including the owner is satisfied with the amount of the expenses then it could be overlooked. If I am the owner or CFO, I am asking for more details when things fall outside a variance. Was the expansion budgeted internally at all, (where were the POs, who can approve, etc.) and were expenses put against the internal budget to make sure it's on target? Any process or routine outside of the normal, established accounting practices (AP sending checks via ACH or wire vs controller doing a one off check every now and then)and I immediately think something could be wrong. Did any of the vendors ever question a 1099 amount if they got one? Once the costs rose, then you could ask for some details, especially the larger invoice amounts. Hindsight is 20/20 though.
This post was edited on 3/6/17 at 3:04 pm
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