Do you think this could happen to you and your business?

October 7, 2011

I have an office in San Francisco and am a huge Giants fan, so when I saw an article about a Giants payroll supervisor stealing $1.5 million from the team in just over one year, it definitely got my attention.

As a multi-million dollar organization, the Giants have the means to hire a first-class accounting firm. So, they hired the best accounting firm. The benefit of hiring a top accounting firm is the assumption they can assist your business in detecting fraud as well as a variety of other money issues.

The detection and prevention of fraud is management’s responsibility (in this case, Giants’ management), and therefore there must have been a weakness in their internal system for this fraud to have happened. This is why they should have had a review of their internal controls to give them the best opportunity to mitigate this type of fraud.

Worse yet, it was fraud that went unnoticed for over a year. In fact, if the perpetrator had not attempted to buy a house in San Diego, and if the lender had not questioned the large deposit in this person’s bank account, it might have gone unnoticed for a much longer period of time.

So, I ask you this: When was the last time you, as a business owner, reviewed your company’s controls to insure this type of fraud is not going on in your business? Have you spoken with your CPA and asked how the internal control is, or what you need to do to improve the controls?

In addition, pay attention to your accounting staff and make sure they are buying things they can afford. We question our clients if we see a member of their accounting staff buying expensive cars or real estate that they can’t afford based on their current salary.

Review your controls on a regular basis, review your accounting staff for unusual behavior, and ask yourself how can someone steal from the company without us knowing about it?

Fraud is more common than you might think, and it can be a real threat. Protect yourself. The best insurance you have is you and your own oversight of the inner workings of your business. Take the initiative and investigate.

If you haven’t done so in a long time (or ever) you should call us. We can review your current controls to identify weaknesses and vulnerability issues, providing safeguards and a system that will detect fraud more quickly if it happens to you.

JRA