You should have someone other than the bookkeeper who writes all your checks balance your checkbook even if you sign all the checks. I have a friend who had a bookkeeper with him for twenty six years. He said he trusted her totally “like he would his wife.” She was so loyal she never took a vacation. When she had emergency surgery and was going to be off for an extended period he was in a near panic because he depended on her completely. His accounting firm sent in one of their employees to do the bookkeeping. They discovered that the loyal employees husband had been on the payroll for three years without once showing up for work. There were a number of other unusual transactions such as “’office furniture” delivered her home. By the time the investigation was over the damage that they could prove exceeded $100,000.
In the home building business I always had the checking statement sent to my home instead of the office and I balanced it myself. If you do not want to do it yourself have someone familiar with your industry and you company other than the bookkeeper balance it. You accountant may get the math right but may not recognize ghost employees, improper expenses or even honest mistakes such as double paying expenses.
Checks and balances such as this simple procedure are a good way to keep honest employees honest. You may also find that this simple procedure will reduce errors when the employees know someone in management is looking over their shoulder.
All original content ©Thomas Robinson 2010
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