Datasheet

Book VII
Chapter 1
Administering
QuickBooks
465
Maintaining Good Accounting Controls
may want to compare tobacco inventory on a daily basis, beer and wine
inventory on a weekly basis, and all other grocery inventory items on a
monthly or annual basis. This approach to frequently counting the most
valuable and easiest-to-steal items accomplishes two things:
• Inventory shrinkage is quickly identified.
• The business owner can minimize inventory shrinkage by identifying
the type of inventory that is most often stolen or even when inven-
tory is most often stolen.
✦ Reconcile bank accounts. One thing that business owners should do, in
my opinion, is reconcile their own bank accounts. Often, employee theft
by accounting personnel occurs as employees figure out how to write
checks on the company’s bank account that the owner doesn’t see. One
sure way to find a fictitious and fraudulent transaction is to have the
owner reconcile the bank statement. If the owner reconciles the bank
statement, she can compare the bank’s accounting for the account with
the company’s QuickBooks accounting records. Any obvious discrep-
ancies can be fixed — which means that the QuickBooks accounting
records are more accurate. Additionally, any flaky, suspicious transac-
tions tend to become obvious when the business owner looks closely at
checks.
The first employee I ever hired was a check forger. He began forging
checks on one of my businesses’ checking accounts two or three weeks
after he started working for me. I caught him only because I was regu-
larly reconciling the checking account. (He was convicted of a felony a
few months later.)
✦ Segregate accounting from physical custody where possible. In a small
business, it’s difficult to always separate the accounting for some activ-
ity from the physical custody or physical responsibility for that activ-
ity. For example, it’s tough to segregate the inventory accounting from
physical custody or access to that inventory. A store clerk, for example,
may easily be able to steal cigarettes and also adjust inventory records
through cash register sales for cigarettes. Nevertheless, wherever you
can segregate physical custody from accounting, a built-in error check-
ing occurs. The person doing the accounting indirectly checks on the
physical custodians’ caretaking of the asset. If the physical custodian is
stealing cartons of cigarettes, for example, that will show up when the
accountant compares the accounting records to the physical accounts
of inventory. Similarly, someone without access to the cash and the
bank account can’t actually easily steal cash even if he has complete
access to cash accounting records. You can ask your CPA for help in
devising ways to segregate physical custody of assets from account-
ing and bookkeeping duties. And you really, really should do this.
Unfortunately, employee theft is very common.
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