After a couple of prosperous years, a rental store acquired new property and machinery, and increased its work force. The owner, feeling overwhelmed at tax time, hired a reputable accountant to help with the taxes and to get the bookkeeping back in order, which had been a little haphazard while the business was booming.
After a couple of weeks, the accountant placed a call to the owner stating that there were several withdrawals over the last two years that he couldn’t figure out. The total withdrawn over this period was right around $20,000. The withdrawals were all made by the same person, a longtime employee in the accounting department. When confronted by the owner, the employee stated that she would look into it and get back to the owner. This never happened. Later on, the authorities discovered evidence of the thefts on the personal computer of the employee.
You can never tell about some people, but what you can do is always have an idea about the day-to-day bookkeeping practices of your business. Hire an independent accountant to help install checks and balances so that you are notified by the financial institutions when irregularities occur. Conduct a thorough examination of your bank statements each quarter or hire someone to do it. This employee simply went to the bank and made withdrawals from the company account. It shouldn’t be that easy. Protect yourself, your business and make it harder on would-be thieves.
Have a question or comment? Click here and Ask the Author.
This item, provided by ARA Insurance, Kansas City, Mo., is the story of a real-life insurance claim involving a rental store and is intended to help readers better understand and manage risk. For more safety and risk management information, customers of ARA Insurance can log on to ReSource. Access is free, so if you haven’t signed up yet, contact your agent or call 800-821-6580.