Whilst looking for inspiration for my next blog I turned to my Facebook page to see what my friends, family and colleagues would come up with. Now you will always get one smart arse amongst them all, and one came up with “should you trust your bookkeeper?”
That is a damn fine question as it turns out. My answer has to be yes, but only if you, the business owner has put the right processes in place to mitigate the risks of fraud or theft.
I personally feel that the only person that should make payments to suppliers or wages is the business owner. If the business is too big then there should be segregation of duties, bacs payments should be checked and signed off by a second person and a third person should be involved periodically to reduce the risk of collusion.
Some of the common frauds include, putting ghost invoices through the purchase ledger with payment going to a different bank account, so if a supplier changes their bank account check it out with their accounts department to make sure this is the case.
Payments made to ghost employees is another way someone may be stealing from you, to mitigate this physically verify that your employee exists.
Review your accounts and trial balance and make sure that your control accounts like creditors, PAYE and NIC, VAT, directors loan account all agree to 3rd party proof, like your vat return, P32’s, suppliers are reconciled to supplier statements. Are there any unknown entries in the balance sheet or the profit and loss account that you don’t know what they are? Look into it, ask your bookkeeper or accountant what it is, they will be able to answer it, check it to an invoice.
This is really scratching the surface but the one line you should take away from this is “good people can fall on bad times” and if the opportunity comes they may just take what is yours.
- Tip 1. Check your trial balance and review your figures monthly/quarterly even better randomly check them and make sure everyone in the finance department knows that you check them.
- Tip 2. Check your Gross profit percentages, wages to turnover percentages as any wild swing could give you an indication things are not right.
- Tip 3. Don’t give your bookkeeper access to your passwords to your bank account/paypal account, or credit cards. The credit cards are not so bad so long as there is a smallish limit on it, reducing your exposure.
- Tip 4. Does your bookkeeper live outside their own means, 2-3 great holidays a year on a £18K salary? I would doubt they got them on some cheap website.