A few months later Josh’s phone rang.  It was Steve, and he had an idea.  Alright Supply did quite a lot of business with Stillman Industries, the company where Steve worked as a bookkeeper.  Steve asked Josh to increase the dollar value of the next few invoices.  He’d pay them as usual, and they could split the extra money.  Since Mr. Stillman was used to doing business with Alright Supply, he probably wouldn’t even notice.

In this worst case scenario, an employee takes advantage of a situation to steal money from his employer.  It happens more often than you might expect.  Experts say schemes like this represent the majority of fraud cases in small businesses.

Worried yet?  You should be if you are a small business owner.  According to the Association of Certified Fraud Examiners more than 30% of all fraud is committed at companies with less than 100 employees, and it often takes more than 18 months to discover that a fraud has even been committed.

You can manually review transactions in QuickBooks, but it takes a lot of time.  Schemes like the one described above don’t have to be costly or even hard to detect.  AuditMyBooks Analyzer automatically scans accounting records in minutes to detect possible problems.  Our free Analyzer Check-up scans every record for more than a dozen possible accounting problems. It’s simple to use and fast enough to run regularly.

Here’s how to double check for strange increases in vendor payment amounts in 3 simple steps:

1) Sign in to AuditMyBooks Analyzer at the Intuit App Center. (click here)
2) Visit the Rules tab and turn off all Rules except for “Above Average Bill Payments”. (see example)
3) Visit My Dashboard and click “Quick Scan”. (see example)

An unexplained jump in payment amounts could signal not only employee fraud, but also related vendor kickbacks.

We recommend scanning you QuickBooks with AuditMyBooks Analyzer AT LEAST monthly.  No one thinks twice about using anti-virus software to protect their computer from hackers.  Shouldn’t your financial resources get the same level of protection? The added diligence of even a monthly scan with Analyzer reduces the chance of accounting errors & fraud.  The sooner potential problems are discovered, the sooner corrective action can be taken to address them.

Don’t waste time… Analyze today!

-CP Morey

“We only need a few thousand dollars,” thought Katy.  “It’s not stealing.  It’s more like a loan.  I’ll pay it back when we get our tax refund.”  Katy figured no one would notice an extra AMEX payment.  Even if they did, she could claim that she paid her personal bill with company funds by mistake.  She was putting in so much overtime lately.  They owed her.

In this worst case scenario, an employee takes advantage of a situation to steal money from her employer.  It happens more often than you might expect.  Experts say schemes like this represent the majority of fraud cases in small businesses.

Worried yet?  You should be if you are a small business owner.  According to the Association of Certified Fraud Examiners more than 30% of all fraud is committed at companies with less than 100 employees, and it often takes more than 18 months to discover that a fraud has even been committed.

You can manually review transactions in QuickBooks, but it takes a lot of time.  Schemes like Katy’s don’t have to be costly or even hard to detect.  AuditMyBooks Analyzer automatically scans accounting records in minutes to detect possible problems.  Our free Analyzer Check-up scans every record for more than a dozen possible accounting problems. It’s simple to use and fast enough to run regularly.

Here’s how to double check for strange increases in vendor payments in 3 simple steps:

1) Sign in to AuditMyBooks Analyzer at the Intuit App Center. (click here)
2) Visit the Rules tab and turn off all Rules except for “Abnormal Bill Payment Volume”. (see example)
3) Visit My Dashboard and click “Quick Scan”. (see example)

If you’re used to paying 12 bills a year to a vendor and you now have 14 or 15 payments, find out why. An unexplained jump in the number of payments could signal not only employee fraud, but also related vendor kickbacks.

We recommend scanning you QuickBooks with AuditMyBooks Analyzer AT LEAST monthly.  No one thinks twice about using anti-virus software to protect their computer from hackers.  Shouldn’t your financial resources get the same level of protection? The added diligence of even a monthly scan with Analyzer reduces the chance of accounting errors & fraud.  The sooner potential problems are discovered, the sooner corrective action can be taken to address them.

Don’t waste time… Analyze today!

-CP Morey

Fire department loses $113,205 to a bookkeeper with a bad coke habit.

Owners ask for lite sentence for bookkeeper who stole more than $50,000 from the company.

A woman has been sentenced to 15 years in prison for embezzling more than $1.5 million from a timber company to feed a gambling habit.

Landscaping company bookkeeper stole more than $75,000.  He wrote checks to himself and tried to conceal the thefts by making it appear as if the checks were paid to others.

A bookkeeper with an Amarillo construction company pleaded guilty in federal court Wednesday to stealing from her former employer.

-CP Morey

(photo courtesy of wikipedia)

Bookkeeper at real estate firm steals $30,000 and goes to jail.  The owner discovered crime when bookkeeper took vacation.

A former bookkeeper accused of stealing more than $200,000 from one of her clients says she has proof she didn’t take the money, according to her lawyer.

A judge has ordered a former church bookkeeper to pay $179,670 in restitution and write an apology to members of a Colorado Springs congregation after she pleaded guilty to stealing church funds.

Residents were horrified to find out this week that a retired dispatcher at the Fire Department was charged with stealing more than $196,000 over a six-year period from the department’s general fund.

A bookkeeper stole more than $800,000 from a small business in South Carolina.

-CP Morey

(photo courtesy of wikipedia)

Experts say that more than half of all accounting mistakes result from simple bookkeeping errors or misapplication of easily understood accounting standards.  Errors like forgetting about vendor credits or writing checks to a vendor and not applying the payment to an open bill.

You can manually review transactions in QuickBooks, but it takes a lot of time.  Mistakes don’t have to be costly or even hard to detect.  AuditMyBooks Analyzer automatically scans accounting records in minutes to detect possible problems.  Our free Analyzer Check-up scans every record for more than a dozen possible accounting problems. It’s simple to use and fast enough to run regularly.

Here’s how to double check for Unapplied Credits and Checks to Vendors with Open Bills in 3 simple steps:

1) Sign in to AuditMyBooks Analyzer at the Intuit App Center. (click here)
2) Visit the Rules tab and turn off all Rules except for “Checks to Vendors with Open Bills” and “Unapplied Vendor Credits”. (see example)
3) Visit My Dashboard and click “Quick Scan”. (see example)

Checks are typically written to a vendor to settle an open bill. Similarly, credits from a vendor should be applied to an open bill.  Check payments or vendor credits not associated with an open bill could result by mistake.  When this occurs, vendors may inadvertently be paid twice and the financial statements my not properly reflect the health of the business.

We recommend scanning you QuickBooks with AuditMyBooks Analyzer AT LEAST monthly.  No one thinks twice about using anti-virus software to protect their computer from hackers.  Shouldn’t your financial resources get the same level of protection? The added diligence of even a monthly scan with Analyzer reduces the chance of accounting errors & fraud.  The sooner potential problems are discovered, the sooner corrective action can be taken to address them.

Don’t waste time… Analyze today!

-CP Morey

What do Hendrick Health System, Cary Services, Pee Wee Jets Pop Warner Football Team and KGNZ Radio have in common? They are all in Abilene, TX. They all have budgets (granted, they are very different sized budgets). And they all experienced embezzlement by trusted staff members in the last couple of years. You may think it can’t happen to you. (read more)

More True Stories…

A woman was charged after authorities said she embezzled nearly $60,000 from an employer.  She used forged checks and the company credit card.

A 35-year-old mother of four got a conditional sentence of two years less a day and was ordered to pay back more than $124,000 she stole while doing bookkeeping work.  She avoided jail time because she had the “decency to feel ashamed”.

An Erie woman told a judge that she knew it was wrong to steal more than $95,000 from her employer.  The crime, had it not been detected, would have driven the company into bankruptcy.

A woman steals more than $200,000 from her employer by depositing customer payments into her own account.  Company no longer in business.

-CP Morey

(photo courtesy of wikipedia)

Many companies have similar policies.  Purchases over a certain dollar amount need to be approved by a manager.  In more sophisticated systems approval amounts may increase with title or even require sign off by more than one person.

Like any good policy, there are ways to get around purchase approval limits.  Last year I bought some new tools for my shop.  Individually, they were all under $500, but together they were more.  Instead of giving my wife the “heads-up”, I could have simply divided the tools into groups less than $500 each, paying separately for each group.  Technically, I would have been in compliance with our agreement.

Unfortunately there are more devious scenarios involving approval limit violations.  Assume an employee knows that all purchases over $1,000 in your company require approval.  Assume they also want to skim a few extra dollars from the company till.  What is the easiest way to get the most money? Create a few invoices just below the approval level: $998 when the limit is $1,000.

Worried yet?  You should be if you are a small business owner.  According to the ACFE more than 30% of all fraud is committed at small companies, and it often takes more than 18 months to discover that a fraud has even been committed.

In fairness, there may be legitimate reasons to split invoices, but you probably still want to know that it’s happening.

Although you can manually review transactions in QuickBooks, it could take quite a lot of time.  Fortunately, AuditMyBooks Analyzer automatically double checks for problems like splitting payments to avoid approval limits.  Here’s how to do it in 3 simple steps:

1) Sign in to AuditMyBooks Analyzer at the Intuit App Center. (click here)

2) Visit the Rules tab and turn off all Rules except for “Approval Limit Per Vendor”. (see example)

3) Visit My Dashboard and click “Quick Scan”. (see example)

When you view the results focus on cases with the highest number of transactions in the shortest period of time.   Pay extra attention to the ones that are material (i.e. high dollar value).  You can even adjust the Span of Time Analyzer uses to identify split payments.  For example, a setting equal to 5 days looks for possible split payments within a 5 day period.

We recommend scanning your QuickBooks with AuditMyBooks Analyzer AT LEAST monthly.  No one thinks twice about using anti-virus software to protect their computer from hackers.  Shouldn’t your financial resources get the same level of protection? The added diligence of even a monthly scan with Analyzer reduces the chance of accounting errors & fraud.  The sooner potential problems are discovered, the sooner corrective action can be taken to address them.

Don’t waste time… Analyze today!

-CP Morey

(photo courtesy of wikipedia)

A man suspected of embezzling at least $250,000 from his employer has been charged with 13 counts of forgery, and one count each of first-degree theft and first-degree identify theft.

A plea agreement has been reached in a case involving a woman accused of embezzling more than $123,000 from her employer.

Small business pays $20,000 for forensic audit to discover bookkeeper embezzled more than $150,000.  She made a “horrible mess” out of the company’s books while using the money to support a lifestyle that included vehicles, trips and expensive hobbies.

Bookkeeper embezzles more than $250,000 from two companies.  Now facing federal charges.

Woman waives right to jury in case alleging six-figure theft from employer.  Crime lasted 6 years before being discovered.

-CP Morey

(photo courtesy of wikipedia)

An employee for a pet clinic responsible for their bookkeeping embezzled nearly $80,000 from the business.

A New Vienna woman has been indicted by a grand jury for the alleged theft of $312,000 from her employer where she worked as a bookkeeper.

A bookkeeper for a  home builder has been indicted for embezzling nearly $1 million from her employer.

A bookkeeper has been sentenced to 52 months in state prison after pleading guilty to embezzlement and state income tax fraud.

U.S. Attorney Sanford Coats last week announced convictions against five women who had been accused of embezzling from their places of business. The total amount taken was nearly $2.6 million.

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

(photo courtesy of wikipedia)

He used the certificate to set-up a business checking account and then added his new enterprise as a vendor in QuickBooks.  A few days later he submitted his first invoice for payment.  His boss, the owner of the company, never noticed.  Paul stole nearly $500,000 over the next 3 years…

Unfortunately, this story is far too common when it comes to small business fraud.  According to experts, shell company schemes, where a fake entity is established by a dishonest employee to bill a company for goods or services it does not receive, represent about half of all fraudulent disbursement schemes.

All it takes is a greedy employee.  In many cases the scheming can last for years.  Recent research by the Association of Certified Fraud Examiners (ACFE) pegs the median loss from shell company schemes at nearly $600,000.

Worried yet?  You should be if you are a small business owner.  According to the ACFE more than 30% of all fraud is committed at companies with less than 100 employees, and it often takes more than 18 months to discover that a fraud has even been committed.

The simplest thing you can do is take the time to regularly review your transactions.  Make sure you recognize the names on the vendor list.  This won’t catch all the possible problems, but it can help.

If you are short on time or interested in looking alittle deeper, use AuditMyBooks Analyzer to help identify possible shell company schemes.  Here’s how to do it in 3 simple steps:

1) Sign in to AuditMyBooks Analyzer at the Intuit App Center. (click here)

2) Visit the Rules tab and turn off all Rules except for “Vendors without email or physical address” and “Payments to a new vendor”. (see example)

3) Visit My Dashboard and click “Quick Scan”. (see example)

When you view the results look for new vendors you don’t recognize.  Pay extra attention if any of the new vendors are also missing an email or physical address.  Legitimate companies should have one or the other.

Is someone you’ve done business with for years suddenly showing up as a new vendor?  Check the vendor list in QuickBooks for similar sounding names.  Fraudsters may attempt to hide a shell company by using a name that is similar to a legitimate vendor.  For example, Peachtree Supply might be legit, while a new vendor named Peechtree Supply or even Peachtree Supply, Inc. could be suspect.

We recommend scanning you QuickBooks with AuditMyBooks Analyzer AT LEAST monthly.  No one thinks twice about using anti-virus software to protect their computer from hackers. Don’t your financial resources deserve the same level of protection? The added diligence of even a monthly scan with Analyzer reduces the chance of accounting errors & fraud.  The sooner potential problems are discovered, the sooner corrective action can be taken to address them.

Don’t waste time… Analyze today!

-CP Morey

(photo courtesy of wikipedia)

Bookkeeper steals $122,513.80 from a business, mostly by using a photocopier to endorse dozens of checks made payable as “cash” and depositing money into his personal bank account.

A former bookkeeper for a developer has been sentenced to 15 years in prison after embezzling almost $900,000.  After collecting cash and check deposits, she would keep the cash and use a check from another account to conceal any monies stolen.

A Milwaukee woman allegedly stole more than $200,000 from a business during the last 9 years.

A ”diabolical”  bookkeeper for a real estate investor has been sentenced to 364 days in jail and probation for stealing $43,620.

Bookkeeper wrote and signed checks to herself, to cash and to others in excess of $597,000 between 2006 and 2009.

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

(photo courtesy of wikipedia)

A former church secretary and bookkeeper will spend three years in prison for stealing more than $364,000 from a La Crosse congregation.

Man steals $11,000 from a shelter for battered women by changing the name of a contractor on a check to include his own name.

A Grayslake woman was placed on probation for four years after she admitted stealing at least $365,000 while working for a landscaping company.

A Winnipeg woman claims she stole more than $77,000 from her employer to provide a better life for her children.

A woman was convicted of embezzling more than $100,000 from her former employer, the Woods Hole, Martha’s Vineyard and Nantucket Steamship Authority.  She carried out her fraud by creating fictitious names of Steamship Authority customers and assigning refund credits to them.

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

(photo courtesy of wikipedia)

We’ve all seen the statistics from the Association of Certified Fraud Examiners (ACFE).  They cast a long shadow on small businesses with respect to fraud.  I’m a “numbers guy”, so I’m always on the prowl for new stats.  I made a discovery while I was catching up on my reading a few days ago, so I thought I’d share:

• The average business loses 6% of its annual revenue to fraud and abuses by internal sources.
• At least 20% of all business failures are the direct result of internal theft.
• One-third of all business bankruptcies are due to internal theft.
• As many as 40% of small-business owners are embezzlement victims.

We’re working hard to help small businesses address this problem.   I’ll be in DC next week working with the National Science Foundation on a future solution.  Stay tuned!

Incidentally, if you’re interested in the full article click here.

-CP

A bookkeeper steals nearly $20,000 from a dental practice in KY. Guess what? She was the the only employee with access to the bookkeeping system and responsible for bank deposits.

A doctor in NJ had to close an office and lay off four employees as a result of the lost money and the legal bills he incurred when his bookkeeper stole more than $60,000.

Three people were found guilty of federal fraud charges, after prosecutors say they stole more than $500,000 from a furniture company and forced the layoffs of more than two dozen employees. They altered the company’s financial books to hide the thefts.

A bookkeeper in TN was charged with stealing more than $400,000 from a nursing home where she worked for more than 10 years.

Freddie Wehbe, a business leader in FL, speaks about how he fell prey to the “fastest growing crime in America”. An employee stole more than $10,000 from him. “It is embarrassing, but I felt I had a duty to open this up to talk about.” (Photo of Freddie above courtesy of www.gainesville.com)

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

Story #1 comes from Florida where a bookkeeper stole over $22,000 by issuing herself unauthorized payroll checks over the last three years.  She was responsible for creating all the paychecks using desktop bookkeeping software.

Off to Connecticut for story #2 where a man was sentenced for embezzling nearly $150,000 from a Stamford company.  He falsified data in the firm’s financial reports and transmitted the falsified reports to the firm’s outside accountant.

Story #3 is set in Illinois where an employee for was arrested for allegedly stealing nearly $80,000 from a veterinary clinic over the course of two years.  The owner became aware of the missing funds when his bank informed him of several discrepancies with the clinic’s bank account.

In Florida, a woman was arrested for allegedly stealing nearly $176,000 from her employer.  She used her position to write dozens of unauthorized checks to herself.  She was paid for her employment by a separate payroll company, indicating there would be no reason for any checks from the firm to be written out to her name.

Our last story for the round-up relates to fraud related survey.  The survey which asked workers if they would steal from their employers found that 30 percent said ‘yes’ and 30 percent responded ‘maybe.  Make sure to read the one about the parking lot attendant who stole for 20 years.

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

Our first story is a doozie from Oakland.  A bookkeeper has been indicted by a federal grand jury on charges of embezzling $240,000 from three small-businesses.  She was depositing checks intended for third-party vendors into her own bank account.

Story #2 keeps us in California.   A bookkeeper made numerous unauthorized transfers from the company’s retirement funds to cover up her embezzlement and also diverted money meant to pay employees’ health care premiums.  The police made sure she didn’t post bail using the stolen funds.

Across the U.S.A. to Florida for story #3.  An office manager at a Clearwater law firm has been charged with stealing $176,000 over six years.  Detectives said of the $176,000 she stole, some $46,000 were in checks she wrote to herself, and about $130,000 were checks to credit cards and other third parties.

I couldn’t pass on a headline like this… “Meat distributor has beef with employee for taking money“.  She stole $50,000 taking $100 at a time.

There was a story a few weeks ago about fraud being lower in the bible belt.  What surprises me is the amount of fraud actually perpetrated by church employees.  Here’s a story about a bookkeeper who stole $360,000 from a church in Wisconsin.

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

Story #1 takes place in Colorado. A bookkeeper convicted of stealing $230,000 from her former employer faces new charges of harassment and violating a protection order.  Evidently the money spent on lingerie didn’t help with the stalking case.

An Oregon woman was sentenced to four years and four months in prison for embezzling nearly $500,000 from the company where she worked as a bookkeeper.  According to her lawyer, she has a bad gambling problem.  Really?

In California a bookkeeper forged hundreds of company checks for the benefit of herself and her family. She hid the theft by falsifying data in an electronic ledger she maintained for the company and didn’t pay income tax on her illegal income.  What a shocker!

Back to Colorado for story #4 where a former employee was sentenced to 10 years in prison Wednesday for stealing more than $700,000 from homeowners associations in metro Denver.

Our last story takes place on the East coast where a woman used bookkeeping computer software to write herself a checks, but made them appear as though they were written to vendors.  She was convicted in 2007, but has been on the run since.  The law finally caught-up with her, and now she’s really in trouble!

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

Scenario A: Business Generates 50 Transactions/Month

If a business generates 600 transactions per year (50 per month) and you can manually check each transaction for 10 of the most common indicators of errors and fraud in less than 1 minute, it would take 10 hours to manually complete the same analysis that AuditMyBooks completes automatically.  Assuming your time is worth $85 per hour means this one-time manual review costs $850.  With an AuditMyBooks subscription you can complete the analysis as often as you like during the subscription period.

Scenario B: Business Generates 15 Transactions/Month

This is a break even analysis that assumes an annual subscription cost equal to around $240.  If a business generates 180 transactions per year (15 per month) and you can manually check each transaction for 10 of the most common indicators of errors and fraud in less than 1 minute, it would take 3 hours to manually complete the same analysis that AuditMyBooks completes automatically.  Assuming your time is worth $85 per hour means this one-time manual review costs $255.  Like the scenario above, it’s important to note that an AuditMyBooks subscription provides unlimited scans, so the unit cost could actually be much lower (e.g. running 2 scans per month would result in a unit cost of $10 per scan vs. $255 per manual analysis).

Scenario C: Based on Average Number of Transactions in Beta

I reviewed data from our beta program to determine the average number of transactions reviewed per QuickBooks file.  The average is 3,267.   With transaction counts this high, the case for automatic scanning is obviously pretty strong.  If you can manually check each transaction for 10 of the most common indicators of errors and fraud in less than 1 minute, it would take 54 hours to manually complete the same analysis that AuditMyBooks completes automatically.  Assuming your time is worth $85 per hour means this one-time manual review costs $4,628.

Like any model, the result can change dramatically based on the variables.  If you are interested in experimenting with the model, send an email to morey<at>auditmybooks<dot>com.  I’d be happy to send your the Excel file.  If you are interested in scanning your data with AuditMyBooks… check out our free trial.

-CP Morey