13 Red Flags to Bookkeeping Fraud
1. Has your bookkeeper asked for signature authority on your checks?
2. Does your bookkeeper's lifestyle seem inconsistent with their earnings?
3. Does your bookkeeper frequently take records home to work on or work in the office when no one is around? (Fraudulent activities are more easily accomplished when no one else is around.)
4. Does your bookkeeper refuse to go on vacation?
5. Does your bookkeeper seem to resent or get defensive when you or your CPA asks questions?
6. Does your bookkeeper have access to your credit card information and receive mail-order packages at work?
7. Are your accounting records in a mess?
8. Do you receive frequent tax delinquency notices that the bookkeeper explains away as government error?
9. Does your bookkeeper insists that he or she handle activities for which other departments are normally responsible: including picking up the daily mail (for fear that something could arrive that would tip-off management), acting as the sole go-between with the company's financial contacts (banks, auditors, creditors, etc.) and working with police when items or money are found missing?
10. Does your bookkeeper continually misfile important items such as payroll receipts, deposit records, supplier correspondence and estimates?
11. Deposits frequently seem too small. Owners should always carefully monitor income and deposits, comparing sales receipts against actual amounts put into the bank.
12. Does your bookkeeper show signs of a drinking, drug, or gambling problem or family financial problems?
13. Has your bookkeeper suggested replacing or getting rid of the outside accounting firm, saying they can handle the duties of the independent accountant and "save the company the added expense?”