If you’re short on time, the answer is simply YES.
I know that this upsets some readers who yearn to think that everyone is honest, but give people an opportunity to steal, and some will; it’s just a fact.
Things often start out fine when grateful bookkeepers and accounting types are hired, but as time goes on many conclude that the heroic efforts they perform on your books are not appreciated. And since compensation to meet their expectations is unlikely, some spend much of their time thinking about how they can get additional compensation from you in other ways.
I’ve heard this in many variations. My first questions are usually: Why weren’t you paying attention to your money? Do you realize that the police will probably label this as alleged civil (not criminal) fraud, and will not pursue it at all? And did you know that even if you go to court and get a judgment you will likely never collect a dime? (S0 many bad guys know that this is a rather lucrative and safe crime.) And what creative trick was used this time (or more likely, it was just one of the usual suspects).
Here are some tips from someone who has seen it all:
- Find the right person: Take time interviewing and vetting potential candidates for your bookkeeping position. It’s not enough to just check references since they will obviously choose only their best friends or partners-in-crime. Go deeper and find others that they worked with previously simply by reading their resume.
- Third-party background checks are great, but watch the many FCRA (yes, FCRA – Fair Credit Reporting Act) regs that need to be followed. Credit and criminal background checks are “matters of record” meaning that they have already been established and this you’ve got to know to avoid “negligent hiring.”
- Additionally, do your own Social Media Background Check or get a third party firm to do this for you (e.g., www.Social61.com). Social Media Background Checks are not matters of record. So if someone is bragging about how they steal office supplies from their employer and then sell it on Bay, you may well see this on Facebook but not in the Criminal Background Check (above). Again, be careful about regulations (for example, don’t request social media logins from your accounting candidate).
- Limit accountant/bookkeeper access and get checks and balances in place. For example, funds should not be disbursed unless at least two people see and approve it – in writing. Also, bookkeepers may have rights to see accounts and download transactions, but not to transfer funds or make online purchases. Most banks and credit card vendors understand this and can easily add “Account Managers” with these limited rights to your account
- Some firms offer incentives to bookkeepers and accountants. If you are happy with your staff consider offering some sort of profit share or bonus incentive. With this, they may always be on the lookout for things to.
- As time goes on and everything is working out smoothly, still – don’t trust anyone involved with your money. Ask unexpected questions at unexpected times. Occasionally ask to see receipts and invoices and be especially curious about new vendors. Make sure everyone knows that you are not asleep-at-the-switch.
Staying involved with the accounting makes your staff feel that you appreciate what they are doing – and will be quickly aware if something goes amiss.