- Gary Bode, CPA: QuickBooks is one of the easier programs to commit small business fraud with! Set it up properly. For a free initial phone consult call 399-2705.
Every QuickBooks CPA has fraud stories. In the 1980s, CPAs condemned QuickBooks for its lack of internal controls. But QuickBooks can now be tightened down for internal control and still retain its user-friendly interface.
“I’ve used QuickBooks for over 15 years, taught it at Baker College and have tutored dozens of clients clients in it. But I still see new, innovative ways to commit fraud with QuickBooks.”
-Gary Bode, QuickBooks CPA in Wilmington NC
I’ll discuss common QuickBooks fraud schemes, but you can’t reasonably rely on this post, or website, to construct an anti-fraud program. Your particular circumstances have to be factored in. Click the QuickBooks category, on the drop down list in the right sidebar, to read our other posts on fraud and QuickBooks.
Anti Fraud Philosophy
To an owner, fraud prevention is like raising a daughter. You want her to live an open, full life while being constantly vigilant against the small percentage of problem boys.
Lead by Example
Every QuickBooks CPA would agree that management sets the tone for the employees. Here are a few quick examples I’ve seen that illustrate my point:
- The boss sexually harasses the help. So three consecutive secretaries either steal or misuse the company credit cards.
- The QuickBooks CPA may not know management pockets cash from off-the-books transactions. But the bookkeeper does. This may help rationalize a false vendor fraud scheme against the company.
Don’t set an immoral or oppressive tone for your company.
Who Commits Fraud
Anyone. So, you have to watch everyone. Sad but true.
Honest Employees like Being Protected from Suspicion of Fraud
Having an omnipresent anti-fraud program doesn’t mean automatic employee alienation. Studies show people act more ethically if they’re being watched. I think all QuickBooks CPAs hear staff express gratitude for helping prevent suspicion of fraud. Why? Because in samller companies, the staff usually has fraud ooptunities.
Unauthorized Borrowing - Carrot and Stick
Small business fraud often starts off small. Folks “borrow” money in a pinch, with intentions of paying it back. Who will know after all? Then it becomes a habit.
Carrot; have an employee pay day loan policy. Stick; let folks know, explicitly, what your anti-fraud policies are. NO borrowing without express permission.
Setup QuickBooks to Combat Fraud
As a QuickBooks CPA I recommend:
- Picking the right version of QuickBooks.
- Turning on QuickBooks’ audit trail.
- Looking at the QuickBooks audit trail.
- Limiting access to parts of QuickBooks for employees through user profiles and passwords.
- Scanning transaction documentation into QuickBooks e.g. bills, receipts.
- Reconciling the bank accounts daily via online banking reports.
- Looking at the QuickBooks bank reconciliations at least weekly.
- Run surprise spot audits.
- Recognizing that small business fraud transcends any accounting software.
We’re a QuickBooks CPA firm in Wilmington NC that offers QuickBooks setup and tutoring. Small business fraud prevention is part of our service. Optimizing QuickBooks for your particular business is what we do best. Then we enjoy showing you how to leverage all that powerful information in QuickBooks into managerial decisions. If you’d like a free initial phone consult with a QuickBooks CPA, call (910) 399-2705
