3 min read

5 Keys to Spotting Accounting Fraud in Your Books

Jun 5, 2018 9:00:00 AM

accounting fraudIs your accountant stealing from you? You can call it robbery, pilfering, or swindling, too, but theft or misappropriation of business funds placed in trust with someone you believed to be a professional can be personally and financially devastating.

Business Fraud and The Trusted Professional

For many people, the idea that their accountant is less than honorable is inconceivable, especially if the relationship is a long-term one. And since business owners tend to be resilient and determined to succeed, they don’t tend to think “theft” when the first signs of something being off appear.

Accountants or bookkeepers intent on shady dealings often look for vulnerabilities in a company’s structure. They love to target those who lack the resources to implement complete systems of internal controls.

Did you know that workplace crime costs U.S. businesses $50 billion dollars a year? The good news is there are plenty of things you can look for and preventive steps you can take if you believe and find all is not on the up-and-up.


How to Spot Theft in Your Books

If you suspect money is making its way out of your and into the accountant’s business, here are 5 key signs that may prove you’re right.

  1. Things just don’t add up. Is the general ledger out of balance? Are you noticing unusual adjustments to receivables and payables? Does it seem there are more purchases than normal or duplicate payments being made? Any of these activities without proper backup is a sign of a serious problem and require your accountant to answer some hard questions.

  2. Unusual behavior. Has your bookkeeper become more reticent about sharing data on the company’s finances? There’s never a good reason for such secrecy. When you’re suddenly being kept out of the loop or reports are incomplete, you should be concerned. If your accountant unexpectedly becomes a man or woman of mystery, trust your instincts and have a third party get involved.

  3. Cash flow becomes a trickle. When cash flow takes a dive, it can be easy to write it off to “the economy.” But if your business is running at its normal level, yet you’re seeing a sudden dip in cash flow, it’s time to take a closer look. If the same number of customers are coming through the door or billings are consistent with prior periods, it’s likely there’s a “leak” somewhere in the cash pipeline.

  4. Customer and vendor complaints have increased. If you’re hearing more money-related gripes from the people you serve or do business with, pay attention. Their complaints can be a good signal that fraudulent action is going one. Again, pay attention to your instincts. If you start to have a bad feeling about the type and number of grievances you’re hearing, further investigation is probably warranted.

  5. Refused offers of help. As the fraud increases, the perpetrator may start skipping vacations and sick days for fear of being caught. Where once work overload was assigned out, it’s now all done by one person – the bookkeeper. Personal problems and new behaviors such as an increase in drinking or defensiveness and irritability are also causes for suspicion.


What You Can Do to Stop Accounting Fraud in Its Tracks

Besides the obvious self-enrichment, who really knows why a trusted bookkeeper starts to steal? There is a solution, though, that takes a human’s sense of entitlement out of the equation: robotics. Our automated bookkeeping service can handle most of the work typically handled by a live person without any risk of theft.

Of course, Botkeeper offers many other advantages, including 24/7 availability, fast insights, reliable accuracy, and incredible cost savings. Day in and day out, we make it our goal to make outsourcing your books as easy as possible. If you want to protect your business against bookkeeping fraud, we have the virtual accounting solution you need!

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Jessica Veiga

Written by Jessica Veiga

Jessica Veiga is an experienced B2B marketing expert with a history of working in software, SaaS, technology, accounting, and services spaces. Jessica's passion for social sciences and communication drew her to sales and marketing, where she has worked with clients across a range of industries, including retail, education, technology, and more. With real-world experience at top marketing and software companies in Boston, assisting hundreds of businesses across numerous stages of growth, and a BS in Psychology & Counseling, Jessica is uniquely qualified as a senior leader and team player to help lead businesses to maximize their reach, tell their stories, digitally evolve, and build mission-driven marketing strategies.