Datasheet

472
Maintaining Good Accounting Controls
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.
✦ Train employees in the use of QuickBooks. You should train employ-
ees to use QuickBooks if you have a business of any size for two basic
reasons:
• Someone who knows how to use QuickBooks is less likely to make
inadvertent errors. QuickBooks isn’t difficult to use, but neither is
QuickBooks something that you can learn willy-nilly with no help.
Some transactions are pretty tricky, particularly for certain busi-
nesses. So, if you can, it makes good sense to provide some employ-
ees with help or training or both. Those resources let people more
comfortably and more accurately use QuickBooks features to build
financial information that lets you better manage your business.
• Messy accounting records camouflage employee theft. Often, one of
the things you see when employee theft happens is really messed-
up accounting records. For that reason, you can find yourself in a
situation where poorly trained employees create a messy account-
ing system that enables theft by perhaps one of those employees
or some other employee. So training not only means more accurate
accounting records, but also that you’re less likely to have an envi-
ronment conducive to theft or embezzlement.
✦ Manage your QuickBooks accounting system. I’m sorry to report that
many business owners don’t view the accounting system as anything
more than a tool to produce invoices and paychecks and information