AuditMyBooks » a/p leakage

Stealing is Centsless

admin — Thu, 24 Jun 2010 12:27:31 +0000

AuditMyBooks automatically analyzes small and medium business accounting records to detect errors and possible fraud.

When sharing stories about fraud and the techniques used to commit it, people are often surprised by the simplicity factor. I’ve joked that most small business fraudsters are more like Homer Simpson than Danny Ocean. When the owner is focused on running the business and the bookkeeper has too much leeway, it doesn’t take Ocean’s 11 style planning to commit the crime.

I’m going to share one of the simple tricks with you today. (Hopefully, this doesn’t turn into a how to session for a would-be fraudster!) Believe it or not, but people who commit fraud often create transactions with rounded amounts. In other words, they don’t have the sense to add the cents. Sorry, hard to resist.

Reviewing the accounting data for rounded amount payments is a common test used by fraud examiners, and there are many ways to get the job done. Assuming that you are working with a small data set, you could eye-ball it. The manual review is easy, just be careful of clerical errors and the time it takes to review the data regularly. An hour a month for a year is a day and a half of your time.

You can also use tools like Excel to sort and filter data. In fact, the MOD function is a useful feature for this type of analysis. If you want to further refine the analysis, you can even rank vendors by a percentage of rounded amount payments. Sort them in descending order to identify the most suspicious vendors first. One problem with this approach involves excluding legitimate transactions or vendors where rounded payments are normal. For example, the rent on your office is probably a rounded amount.

AuditMyBooks analyzes small and medium business accounting records for irregularities like rounded amount payments. It calculates each vendor’s percentage of rounded payments and allows you to easily exclude legitimate transactions or vendors from the analysis. In short, it works fast, is accurate every time and can be tuned to factors unique to your business.

Working with small business experts who have years of experience as ProAdvisors, Certified Public Accountants, Chief Financial Officers and Certified Fraud Examiners, we’ve identified more than 100 tests to detect errors and fraud. AuditMyBooks can be configured to meet the needs of all small businesses regardless of company size or industry. Unlike manual reviews of transaction logs which are time consuming, costly and rarely performed, AuditMyBooks automatically analyzes accounting records in a matter of minutes. You can use it daily, weekly, monthly … as often as you choose.

Interested in scanning your data?… check out our free trial today.

-CP Morey

AuditMyBooks automatically analyzes small and medium business accounting records to detect errors and possible fraud.

When sharing stories about fraud and the techniques used to commit it, people are often surprised by the simplicity factor. I’ve joked that most small business fraudsters are more like Homer Simpson than Danny Ocean. When the owner is focused on running the business and the bookkeeper has too much leeway, it doesn’t take Ocean’s 11 style planning to commit the crime.

I’m going to share one of the simple tricks with you today. (Hopefully, this doesn’t turn into a how to session for a would-be fraudster!) Believe it or not, but people who commit fraud often create transactions with rounded amounts. In other words, they don’t have the sense to add the cents. Sorry, hard to resist.

Reviewing the accounting data for rounded amount payments is a common test used by fraud examiners, and there are many ways to get the job done. Assuming that you are working with a small data set, you could eye-ball it. The manual review is easy, just be careful of clerical errors and the time it takes to review the data regularly. An hour a month for a year is a day and a half of your time.

You can also use tools like Excel to sort and filter data. In fact, the MOD function is a useful feature for this type of analysis. If you want to further refine the analysis, you can even rank vendors by a percentage of rounded amount payments. Sort them in descending order to identify the most suspicious vendors first. One problem with this approach involves excluding exclude legitimate transactions or vendors where rounded payments are normal. For example, the rent on your office is probably a rounded amount.

AuditMyBooks analyzes small and medium business accounting records for irregularities like rounded amount payments. It calculates each vendor’s percentage of rounded payments and allows you to easily exclude legitimate transactions or vendors from the analysis. In short, it works fast, is accurate every time and can be tuned to factors unique to your business.

Working with small business experts who have years of experience as ProAdvisors, Certified Public Accountants, Chief Financial Officers and Certified Fraud Examiners, we’ve identified more than 100 tests to detect errors and fraud. AuditMyBooks can be configured to meet the needs of all small businesses regardless of company size or industry. Unlike manual reviews of transaction logs which are time consuming, costly and rarely performed, AuditMyBooks automatically analyzes accounting records in a matter of minutes. You can use it daily, weekly, monthly … as often as you choose.

Interested in scanning your data?… check out our free trial today.

-CP Morey

True Story Round-up for June 22

admin — Tue, 22 Jun 2010 17:11:19 +0000

A true story round up for June 22, 2010:

#1 comes to us from Colorado where a former employee of Anderson Ranch Arts Center pleaded guilty Monday to embezzling hundreds of thousands of dollars from the nonprofit as part of a plea deal. The surprise in this story is that the accused is working as a bookkeeper at another company while she waits for her trial… REALLY?!?!?

#2 involves a bookkeeper in Maryland who embezzled more than $100,000 because, “she needed the money for her house.“ No problem, why didn’t you just say so… and what a surprise, the husband “had no idea”.

Back out west for #3 where a bookkeeper in Oregon was sentenced in a $742K embezzlement scheme with a tire company. The statute of limitations helped her in this case… too bad.

#4 takes place in West Virginia where for 12 years, a woman helped keep the Special Olympics’ finances in order and is now admitting to betrayal. Her $10,000 crime carries a $250,000 fine and 15 year sentence. Don’t Mess with Texas West Virginia.

The last story in today’s round up is from Indiana where a woman was arrested on 72 felony charges accusing her of forging more than $27,000 in checks while she was the bookkeeper. She worked with sewage… there are so many good jokes here… never mind!

If you have stories to share, send them to truestories@auditmybooks.com. If we publish them, we’ll give you full credit and a link back to your site.

-CP Morey

Diary of a Bad, Bad Bookkeeper by Betty Bookkeeper

admin — Fri, 18 Jun 2010 12:35:18 +0000

I recently discovered OneHourBookkeeper.com and E.T. Barton. I really enjoy her writing, especially a recent post about a really bad bookkeeper…

Another day, another dollar or at least, another stolen dollar.

Well, I have had my own company for about two weeks now and made a couple thousand dollars skimming off the deposits. The boss has not noticed. As far as he is concerned, all of the invoices are paid, and I am doing my job incredibly well. In fact, I just passed the three month trial period, and the boss gave me a $0.50 an hour raise. When he told me that, I felt like saying, “Really? A whole $0.50 an hour. You are too kind. Now I can buy that car I need.” But instead =>

Head over to One Hour Bookkeeper to see how the story ends! Then, come back to learn more about how AuditMyBooks looks for warning signs like possible bogus vendors and irregular payments to help you automatically detect errors and fraud.

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Happy Friday!

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-CP Morey

True Story Round-up for June 15

admin — Tue, 15 Jun 2010 16:35:29 +0000

A true story round up for June 15, 2010:

#1 comes to us from Wilmington, Delaware where the bookkeeper for a small business has been arrested for allegedly embezzling more than $83,000 from her employer. She used vendor payments to mask the embezzlement, but it eventually caught up with her.

#2 involves a repeat offender who pleaded guilty to $400,000 embezzlement in 2005, and is now facing a charge for writing $20,000 in bogus paychecks to her boyfriend. She told her co-workers that the company was sponsoring him as a professional bowler… clever!

#3 is a law firm theft. Anecdotally, I’ve noticed a lot of law firm cases which seems really reckless to me. Stealing from anyone can cause problems for you, but from a lawyer?

#4 is another high dollar theft. A bookkeeper for a small business in New Jersey stole $400,000 by writing checks to herself in her maiden name and failing to pay the company’s taxes. What’s unique about this case is that the criminal turned herself in before the investigation was completed. Still, the owner had to tap their retirement funds to cover the losses, keep the business running and keep the Internal Revenue Service at bay.

The 5^th story in our round-up shows that crime doesn’t pay whatever the reason may be. A bookkeeper accused of stealing nearly $70,000 tried to justify the crime as a result of her “desire to provide for her family” and because her “judgment was clouded at the time by a combination of medications”. They convicted her!

If you have stories to share, send them to truestories@auditmybooks.com. If we publish them, we’ll give you full credit and a link back to your site.

-CP Morey

Paid for the Same Thing Twice?

admin — Tue, 25 May 2010 14:02:25 +0000

AuditMyBooks automatically analyzes small and medium business accounting records to detect errors and possible fraud.

Despite mentioning errors before fraud in most of our copy, it seems we often focus on the later. I suppose it has something to do with CSI airing 3 nights a week. Everyone loves a good “whodunit”, and the stories behind most fraud cases usually don’t disappoint.

While I doubt we’ll be seeing any shows next season with plotlines based on accounting errors, we shouldn’t treat them as secondary to fraud. From an economic standpoint accounting errors can be quite interesting, especially when considering the opportunity for financial recovery.

Take duplicate payments as an example. In most cases they are not fraud related, but can represent a significant financial loss. Experts estimate that as much as 2% of payments are duplicated. Assuming you process $1 million in A/P invoices means you could be losing as much as $20,000 per year. To make matters worse, assume you’re running a company that makes 10 cents on the dollar. A $20,000 expense leak requires $200,000 in new sales to offset it. Accounting errors are suddenly pretty interesting.

Accounting software packages usually have some controls related to duplicate invoices, but there are still ways to make mistakes. Write a check to a vendor on Monday and process the same transaction as a vendor invoice on Wednesday, and you’re on your way. There are several “opportunities” to make the mistake.

There are solutions to the A/P leakage problem. Last week I attended a training session hosted by an enterprise software company called IDEA. Duplicate payments was one of the examples the instructor used to illustrate the value of the application. ACL is another application that can be used to identify leakage. Like IDEA, ACL is geared towards large companies or accounting professionals with specialized training.

AuditMyBooks automatically analyzes small and medium business accounting records for mistakes like duplicate payments. Working with small business experts who have years of experience as ProAdvisors, Certified Public Accountants, Chief Financial Officers and Certified Fraud Examiners, we’ve identified more than 100 tests to detect errors and fraud. AuditMyBooks can be configured to meet the needs of all small businesses regardless of company size or industry. Unlike manual reviews of transaction logs which are time consuming, costly and rarely performed, AuditMyBooks automatically analyzes accounting records in a matter of minutes. You can use it daily, weekly, monthly … as often as you choose.

One of our beta users found a duplicate payment a few weeks ago. Interested in scanning your data… check out our free trial today.

-CP Morey