Trust, but Verify Part 2

by | Sep 30, 2020 | Short & to the point.

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Trust, but Verify Part 2

Our prior post discussed the necessity of monitoring staff activities to reduce the chances of intentional or unintentional errors, or worse, hitting your company. You can probably guess where your company can end up if you do not watch your assets, but if you are reading this far, you want to see some of what happened to others. We are happy to oblige.

One company we worked with did not have payroll supervision. The long-time payroll clerk realized this, and to cover a lack of success at casinos, the clerk started writing and cashing duplicate checks for employee vacation pay. It was a large, profitable company, but it would have been more so had the clerk not absconded with over $100,000 per year for over a decade. A little supervision, review, and logic likely would have saved several years of disappearing cash.

Another instance of overreliance on a long-time trusted bookkeeper was discovered when the bookkeeper fell ill suddenly and could not write a given month’s checks. The owner asked where the second phone, gas and electric bills were since they had been paying them since the warehouse addition had been completed about 10 years earlier. The owner discovered that the bookkeeper had been paying their own utility bills each month – way overpaying them. Each quarter or so, they would ask the utilities for their overpayments to be refunded. In over 120 months, the owner had asked only one time about why there were multiple payments, and never checked the answer he received.

Our final example here of a lack of supervision and review of staff work is well-known, at least in the MidWest – the fraud in Dixon, Illinois that cost the town of maybe 16,000 people at least $53,000,000 over about a 20-year period. Without rehashing the entire situation, suffice it to say there were clues had people been looking. There were few controls over expenditures, including only one check signer required. There was a large, active account set up where the stolen money was sent, that was not discovered until another city clerk happened across it while the fraudster was on leave. And the perpetrator had a hobby – show horses – way above her means.

A business owner or manager does not need to treat their employees as suspects. They just need to treat their assets as the value they represent to the business and the owner.[/vc_column_text][vc_column_text]

Events

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Updated Lease Accounting Guidance to Go into Effect Soon!

Updated Lease Accounting Guidance to Go into Effect Soon!

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, which created Accounting Standards Codification (ASC) Section 842, Leases (“ASC 842”). This new standard provides significant updated guidance for how non-public business entities account for operating and capital leases.

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