Beware the fraudulent bookkeeper
More than $31 million has been stolen from Australian small businesses over the last five years, according to a recent study conducted by forensic accounting firm, Warfield and Associates.
Unfortunately, small business owners are more susceptible to being targeted by fraudulent bookkeepers, as they don’t usually have a lot of financial nous and put a lot of trust into someone who understands accountants and payments, said partner Brett Warfield.
According to Warfield, some of the biggest clues that your bookkeeper may be committing fraudulent activity is if they’re quite secretive about their work, the books and records are not always be available for you to view and bank statements are missing.
“If you think something dodgy is going on, get an independent person or firm to have a look for you. If you think there’s fraud involved, get a fraud investigator in, because they’ll know where to look and what questions to ask,” he told Smarter Business Ideas. “We know a lot of the warning signs and within half an hour or so of speaking to a boss, we can tell if there’s been fraud and we make recommendations as to what to do next.”
The study found that more than half of the fraudulent bookkeepers had stolen money by allegedly paying bills and simply electronically transferring money from the businesses into their own bank accounts. The second most common way was by using cheques payable to themselves or to a third party that was of benefit to themselves, such as paying off their bills with the cheques. Often they were a signatory to the cheque or they had forged the signature of the director of the business.
Warfield offered some tips as to how to avoid engaging with a dodgy bookkeeper.
- Do a criminal history check.
- Check their references.
- Don’t ever let the bookkeeper do the payment of transactions by themselves.
- The bookkeeper should never take the company’s books off-site.
If you do discover that your business has been defrauded, quantify how much has been taken and try to recover the money. A solicitor or forensic accountant may be able to help you out, depending on the amount that was stolen.
“There are opportunities for the organisation to get some or all of it back quickly,” said Warfield.
“Some of the bookkeepers [in the study] put the money into property, and as a result, the business owners were able to get the money back by selling properties. But you have to do it quickly, you can’t hang around.”
You may also wish to report your case to the police, but as Warfield advised, you will need to first gather evidence in a form that can be used in court.