Theft: Is Someone Cheating You?

Recently, I've been hearing more stories of someone being cheated by their bookkeeper. If you'd like a few tips on how to not become the unsuspecting nonprofit executive director or small business owner that gets cheated, please read on for a few tips on how to avoid the pitfalls of theft. 

There are only a handful of reasons that I can think of that a person would cheat an organization. They may feel left out, underpaid or under appreciated. While the tips below will not address these three things in depth, I hope they assist you in having a great experience with your in house or remote bookkeeper. 

When considering a bookkeeper:
1. Do your due diligence - ask for references and contact all of them (even for a remote bookkeeper). 
2. Consider doing a background check - Bookkeepers deal with sensitive financial information, so you want an honest professional. 
3. Be sure to check outside sources such as social media and web pages for red flags. 

When setting up internal controls:
1. Limit your bookkeeper's access to managerial financial tasks (no ability to sign checks, make bank withdrawals, use your bank's bill pay system, etc). Use online approval tools that have audit trails to assist in these tasks. 
2. Spread tasks out across at least two parties, yourself included. Do not have your bookkeeper enter bills and then cut and sign checks. Those are poor bookkeeping procedures, leaving you open to theft. It's also a best practice that you do not cut and sign checks. 
3. Consider a remote bookkeeper as a possible cost effective way to spread tasks between two parties. They can enter the bill that then creates an approval request through a third party approval and payment system that only pays the bill after you, the check signer, approves the expense as valid.  

Include your bookkeeper in the organization: 
1. If your bookkeeper is "in on the action," they will be less likely to steal from you.
2. If you are happy with your bookkeeper, offer them some sort of  incentive. If you are a nonprofit, include them in a newsletter feature. If you are company, consider a bonus or a spotlight in the company newsletter. Be creative in this, it will show your appreciation for what a bookkeeper brings to your organization.  
3. If you are using a remote bookkeeper, consider them a team player and keep them in the inner circle of what's going on at your organization. Invite them to participate in organization wide meetings via a video feed. Be sure they have crucial information regarding up and coming changes in the business in advance, etc. Again, be creative! 

Audit your bookkeeper:
1. Ask to see copies of invoices and receipts, it shows you are involved and "watching" the books.
2. Stay involved with the day to day bookkeeping activities. Ask good questions like, "How are things going with collecting from that client?" and other questions that impact your business growth. 
3. With a remote bookkeeper, answer emails in a timely manner or have regularly scheduled video meetings to show your involvement. 

By staying involved in the day-to-day bookkeeping, and having the right procedures with checks and balances in place, you will aid in keeping someone from stealing from you. 

So are you a nonprofit or a small business looking for clarity about bookkeeping procedures and division of duties for your organization? Email me at cmweaver [at] cwbookkeepingservice [dot] com or call me at 865-951-7407 for free consultation. 

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business adviser, or tax adviser with respect to matters referenced in this post. Candance Weaver Bookkeeping assumes no liability for actions taken in reliance upon the information contained herein