Dodgy bookkeepers: signs they may be stealing from you and how to stop it

In an ideal world, your bookkeeper should be someone trustworthy and loyal. After all, your bookkeeper knows the ins and outs of your business almost as well as you do, and many business owners rely on their bookkeepers to make suggestions and give advice on how to expand or cut costs.

According to Coco Hou, CEO of Platinum Accounting Australia, the number of bookkeepers being exposed for theft is on the rise.  

"Unfortunately, some business owners do not know their bookkeeper is stealing from them until it is too late.  Even worse, many cases go undetected altogether," Ms Hou said.

"What do you do if you suspect that your bookkeeper has been engaging in fraud?   There are some red flags you need to be aware of and precautions you can take. We have assisted a number of businesses to pinpoint where their bookkeeper has been siphoning funds away from the business from right under the owner's nose."

Hou has outlined tips on what to look for.  

Pick someone accountable

"Firstly, when appointing a bookkeeper, I recommend engaging someone who is connected to an accounting firm," Ms Hou said.

"Many bookkeepers work in tandem or as part of an accountant's network of services.  This means the accountant has undertaken rigorous checks and is able to regularly interrogate the bookkeeper's work.  At Platinum Accounting Australia, we offer bookkeeping services through our service partners.  If you appoint a bookkeeper outside of this type of structure the level of risk increases."

What are the red flags?

"If your bookkeeper is embezzling funds from your business, it can be really hard to detect because they'll know how to cover their tracks well," Ms Hou said.

"Go with your gut, if your instinct is telling you that something is not quite right, it's time to undertake some detective work and investigate. If you've known your bookkeeper for a long time, have you noticed any change in habits or conduct?

"Is your bookkeeper suddenly working longer hours or on the weekends?

"It's a sad reality that often people who are driven towards fraud have pressures and stress factors that have led them towards this action. They might have a big debt to overcome or maybe living beyond their means."

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Signs of fraudulent activity

"So, you've reached the point where something's not adding up but you're not sure why. The first thing I would advise you to do is to review your bank statements," Ms Hou said.

"Identify where payments are going and to whom. If there are new suppliers appearing in the statements, duplicate payments, or unusual amounts of money going to particular accounts, check them all.

"Go through each and every transaction and see if you can spot any transactions that you don't recognise.   Is your payroll figure the same? Have there been any bank transfers that have occurred that shouldn't have?  Tracking down fraudulent activity requires some detective work."

Get confirmation

"The next thing to do is to find ways to confirm or deny any of these questionable transactions. There is always a trail, so follow the lead until you get to the bottom of it," Ms Hou said.

"Pull up the details for every questionable transaction.  For example, if the payroll figure is higher than you remember it being, and you haven't hired any new staff or given out any promotions, probe a bit further and see where it leads you. You need to get evidence and proper confirmation.

"Call suppliers and ask them to confirm their invoice history and account details.  Reconcile this information against your own records.  While this may identify issues, sometimes it may not because the bookkeeper is too clever and has covered their tracks well."

Hire a professional fraud investigator

"After your thorough investigations, if you are concerned that your bookkeeper is embezzling money,  don't act rashly and dismiss him or her immediately. Instead, hire a professional fraud investigator who can then review your findings and do data analysis to find out if there's other evidence of fraud. The professional can then interview your bookkeeper to get answers, so that you can resolve it, and you can do that if you've dismissed someone," Ms Hou said.

How to prevent fraud from happening

"Prevention is better than cure. The best thing you can do is to prevent fraud from happening in the first place. Your business should make a habit of separating duties by dividing critical duties between at least two different employees or departments," Ms Hou explained.

"Put in place systems so things need to be checked regularly.   Undertake random audits of transactions and check every aspect of the transaction.  Ideally, you should outsource your bookkeeping duties to an external accountant who offers these services."

Safeguarding your business

"Outsourcing your bookkeeping to a trustworthy, reputable accountant is one of the best ways to safeguard your business against inside jobs. Always ask your friends, families and associates for recommendations," Ms Hou said.

About Platinum Accounting Australia

Platinum Accounting Australia is a leading national accounting firm that has been operating in Australia since 2008. With offices across Australia, the business offers a broad range of services for individuals and businesses of all sizes including tax planning, accounting, advisory and bookkeeping.

www.platinumaccg.com.au