It would appear that many bookkeepers are not quite as trustworthy as perhaps we might all presume. There has been a recent marked increase in the number of bookkeepers who have been taken to Court for embezzling money out of their clients.
An article in this month's InVOICE reports on a Stockport bookkeeper recently brought to trial, and you may remember last year’s case of Annette Yeomans who embezzled $9.9 million from California-based Quality Woodworks Inc, the company for which she worked as trusted bookkeeper. In 2009, courts heard how Yeomans would spend up to $25,000 a week on her credit card before paying off the balance with company money each Monday. The spending problem saw Yeoman’s shoe collection increase to 400 pairs, but saw the company laying off staff to cope with the losses, until American Express called in 2008 regarding a suspicious cheque.
These bookkeepers have taken advantage of the position of trust that they have built up with their clients. Having been given open access to their clients’ bank accounts, including passwords, and even their debit and credit cards, it is perhaps not surprising that some bookkeepers see ‘borrowing’ money from their clients as an end to their own financial problems. Of course the truth of the matter is that it is actually more likely to be just the beginning.
Thankfully the ICB is able to report that none of its members has yet been found guilty of such creative accounting. However, the ICB is currently acting as expert witness in two quite distressing cases where non-ICB bookkeepers with personal financial problems have taken quite large amounts from their clients. In all cases the bookkeeper tried to hide the amounts in the accounts. What is most surprising is that business owners are so unaware of the state of their books that they do not miss tens, and in one case, hundreds of thousands of pounds until it is too late.
Bookkeepers must understand that when this sort of problem comes to light it can rarely be sorted out amicably. In all cases about which the ICB is currently aware, the bookkeeper has ended up in Court and in some cases has gone to prison. In all cases they have lost their livelihood and often their family and friends too.
An offer to pay everything back is usually too late as the missing cash has had a devastating affect on the business which, in many cases, has been forced to cease trading. It is perhaps not surprising in these current times that embezzlement has an even greater impact on struggling clients whose normal cashflow is tight enough let alone during a full-blown recession.
The main thing to take from this sudden upsurge in bookkeeper crime is that bookkeepers are trusted by their clients and must do everything in their power to honour that trust. Having account details and PIN numbers is very useful in letting the bookkeeper get on with his or her job, and for allowing the clients get on with theirs. But with this comes responsibility. Bookkeepers must also ensure that employees, sub-contractors and even family members, know what is expected of them. Proper controls must be used to preserve personal information that is held on file or is used as part of carrying out the bookkeeping function and no one, but no one, should ever forget whose money it is.