The below summary is based on a story printed in INC MAGAZINE- 5/99-
Author Stephanie L. Gruner - Grayed sections represent Auditors Inc. commentary.
Entrepreneur David Schulhof had to learn the hard way that placing complete trust in your accounting staff can be very expensive. His accounting manager embezzled approximately $200,000 within two months. The employee illegally changed the check-signing card requiring only his signature. "'I should have caught it' admits Schulhof, who says he was too busy managing a fast-growing business to read bank statements.'"
As we have shown in the guide, if the thief is clever, then merely reading the original bank statements would not have revealed the theft. Frankly, this thief was very lazy and uninventive. Most thieves would not make that mistake.
Schulhof sold that company and now does things much differently with his new company. He contracts out all accounting and signs all checks.
Wasn't he supposed to be doing that before?
And he has a 2 different people doing accounts receivables and payables
Nice that he can afford 2 different people - but since they both have separate duties - embezzelment may still take place.
According to the Association of Certified Fraud Examiners, in Austin, Texas, "small companies are especially vulnerable to theft -thanks to fewer controls and more trust among people who think they know one another well."
Joseph T. Wells, chairman of the association and author of the book OCCUPATIONAL FRAUD AND ABUSE makes a number of suggestions that he asserts will protect the small business owner from fraud.
We at Auditors Inc. have seen clever thieves circumvent all of the recommendations suggested by Mr. Wells.