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Are you a fan of chicken wings? So much so that you’re willing to drop $1.5 million on stuff?
Accordingly CBS News reports, was Vera Liddell—a former director of food services at a school district in suburban Chicago. She did, yes, buy $1.5 million worth of wings from July 2020 to February 2022 — placing hundreds of unauthorized orders, which were then paid for by the district and then received by her. Authorities are still investigating the scheme, but it’s clear Liddell — assuming she’s guilty — likely sold the wings for profit.
How did the plan come out? A $300,000 budget overage caught the accountants’ eye. Oh, and someone noticed that the school district doesn’t serve chicken wings either.
Stealing so many chicken wings might be a bit unusual. Also Fraud Certainly not in business. Almost every day, you can read reports about how employees steal from their employers.
is a legal secretary in New Jersey was allegedly written More than $184,000 in checks from her firm’s accounts to her friends and family. or who has been a procurement manager in a New York business Accused by FBI for creating fraudulent invoices directing payments to his personal account. or a human resources manager at a small manufacturer in Pennsylvania who gave himself Raised and spent thousands of dollars of his employer’s money using the firm’s credit card. A financial manager for a Minnesota-based property management company Who embezzled Over $1 million in company funding. and Director of Accounting Services who stole More than $2 million from his employer and used it for trips and other personal expenses.
Related: I know how easily money can be stolen from your company’s bank account
There is an employee in a small bank who Made and paid for with the cashier’s check himself using forged signatures. Or an office manager at a law firm in Rhode Island went away With hundreds of thousands of dollars in firm funding. or an employee of a Florida beer distributor That manipulation with the company’s accounts receivable system to steal more than $300,000. or bookkeeper of a Delaware nonprofit who stole Over $2.6 million over a 25-year period.
You and I really don’t care why these people did these things. And it really doesn’t matter how. What really matters is when.
Like many cases of fraud, these incidents — and countless others — happened over a period of time and were eventually discovered long after the money had disappeared. And although prosecuting these people may provide some mental relief to those business owners who were victims, they are still out of pocket. This money stolen They have all been spent over the years. Some of them can be reclaimed. But most of them are long gone. You don’t want that to happen. So what should you do before this kind of thing happens? Well, there are a few things.
For starters, you don’t put one person in control of everything. You separate the duties. Entering your customer invoice Accounting system And the input cash receipt should be done by two different people. The same goes for the payables side. If three people were ordering, receiving, and paying for those chicken wings, it’s likely that one of them would have questioned why the school district was buying chicken wings, let alone why they didn’t include buffalo sauce. You should also have an outside person—an hourly financial affairs worker—do your bank reconciliations.
Your open accounts receivable report — and financial statement — should be closely reviewed each month by someone other than your accounting staff. it’s you And while you’re at it, ask your bookkeeper to print out your monthly general ledger activity and take an hour to read it. It’s not exactly pulp fiction, but your general ledger is basically the financial diary of your business, and the devil is always in the details. Identify and investigation Any behavior that seems unfamiliar or unusual. Hopefully, you’ll get reasonable answers, but there’s always a chance you won’t.
Related: How to reduce the risk of fraudsters accessing your business and personal bank accounts
Monitoring is crucial. A police friend of mine once told me that you can’t involve anyone else to commit a perfect crime because once more people are involved it’s no longer perfect. The same goes for accounting.
Another important trick is to require that everyone—especially anyone who deals with your money—take a vacation. When someone is out of the office, and someone is filling in for that person, you just make sure there’s cross-training, but it’s very likely that the fill-in will stumble upon something unusual if something unusual is going on. will eat The more frequent vacations are required — at least twice a year — the more you’ll potentially limit the amount of time you can cheat. You don’t need workaholics. You need your money.
It is also important that you have a formal process for disbursing funds. It means getting written approval from multiple people for transactions above a certain amount. Approvals can come using an electronic signature platform, or you can ask for yours Accounting software Provider Yes, even this kind of process can be prevented by a clever bookkeeper. But having these controls in place and sticking to them will go a long way toward making a difference and at least send a message to all employees that you have a control system in place and that it matters.
Finally, get insurance and bond your financial personnel. Make sure you have coverage for theft and business damage or disruption caused by theft. This type of insurance is relatively cheap so buy a lot of it.
As business owners, the problem we all have is that we trust too much. We are generally optimistic souls who believe that people will not hurt us. But that’s not really true, is it? If you don’t believe me, I have a few thousand pounds of chicken wings for sale if you are interested.