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The "friendly book keeper" fraud.
How it works: When most of us start out our businesses we are too busy to worry about the mundane stuff like accounts. We need to sell, service customers, collect payments, improve products, increase productivity, reduce defects. The day is a whirlwind and there is no time, and even if there was, we don't really have the inclination to get stuck into boring accounts.
Our solution: we employ someone as our book keeper and they take over the finances. In principle this is good. Our time is freed up and can now be spent on far more productive tasks that result in increased income for our businesses. After a while we rely more and more on our book keepers and they get given more and more responsibility. Sales are booming, but profit is marginal, so we work harder. Then one day a year or two down the track, we either stumble across it by accident or the liquidators inform us of it: The book keeper has been siphoning funds from our accounts.
There are many many ways. Creating false creditors, duplicating payments , etc. Our employee has slowly but surely taken money from us. We never checked so they took more. We trusted them, but money can do strange things to people. It was so easy.
How to prevent it: 1) Always spend some time reviewing your accounts each month. Do random checks to try and pick up irregularities. This means that you need to have a bit of an accounting back ground so take a basic book keeping course. Even if its only an hour a month, do the checks ... it may save your business. 2) Only allow business owners or partners to sign cheques or release electronic payments, never the accountant or book keeper. You still need to run checks though as you need to verify that the accounts and payments are correct.
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