Case Studies

When an accountant or bookkeeper opens the mail, prepares the deposit, records receivables and deposits in the accounting system, and reconciles the bank statement, the opportunity to steal is tremendous. One enterprising bookkeeper opened a personal account at the same bank where the company banked, where she also happened to have a friend who was a teller. Some of the checks were deposited into the company account, others were cashed by the teller/friend and the bookkeeper walked out of the bank with extra spending money. The bookkeeper stole $150,000 over only two years. The business owner could not understand why he had no cash; he took out a second mortgage on his home just to stay in business. The theft was discovered by accident when someone else covered for the bookkeeper. The person covering took a phone call from a client that seemed suspicious, got a copy of the cancelled check in question and the bookkeeper was caught, as was the teller.

LESSON: Clearly there was no segregation of duties and no oversight in this case. It’s likely the bookkeeper rarely took a vacation and refused to let other people help with her work. Learn about other red flags>>