Office Theft Part 2: Are Checks and Balances in Place?


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Last issue we began discussing theft in the office. We talked about creating checks and balances, so that no one person has total responsibility for any area of your company without someone else having oversight in that area. We talked about how to deposit money, monitoring your lines of credit, and reviewing your P&L Statement internally, as well as with our CPA. We also discussed creating and reviewing budgets and having periodic internal audits performed

This month we will look at eight more areas that might be helpful in terms of putting checks and balances in place.

  1. When opening mail, stamp checks “For Deposit Only” and list checks on a log before turning them over to the person responsible for depositing receipts. – This statement is self-explanatory.
  2. Require supervisors to approve time cards before turning them over to payroll – Again this is called accountability. Checking time cards ensures the actual time worked is correct and that any additional information (job number, service ticket, etc.) is properly filled out. Few techs will put extra hours on their timecard if they know their supervisor is reviewing it. A word of caution. One company I am aware of had a “team effort” to steal from the company. The service manager and two of the service techs worked together. The tech would pad his hours and the supervisor would approve them and then then split the extra money. Remember, doors are for honest people. Make sure you are aware of what is going on within your company!
  3. Require accounting department employees to take vacations – This might seem odd, but I personally have worked with a company that had an office staff person (that handled money) that refused to take a vacation because they were just “to busy.” In reality they were stealing from the company and didn’t want anyone else doing their work that might notice what was going on!
  4. Require reconciliation of checkbooks be completed by an independent person who doesn’t have bookkeeping responsibilities or check signing responsibilities – Again, check and double check. If there is no one in the office capable to doing this than pay your accountant, or another outside person, to do the reconciliation. By the way, the term reconciliation is simply a fancy accounting term that means balance the checkbook!
  5. Prohibit writing checks payable to cash – This simply should not be allowed. If money is leaving the company it should be for a very specific purpose. There should be no reason to write a check for cash.
  6. Store blank checks in a locked drawer or cabinet, and limit access to the checks – It’s hard to take what you don’t have access to. Include the company checkbook here as well if the checks aren’t computer generated.
  7. Require two signatures on checks above a specified limit – There should be a cap on the dollar amount of a check that can be signed by only one person. This can be accomplished by requiring two signatures on check over a certain amount, or at least the initials of the owner, along with the normal signature, over that dollar amount.
  8. Issue receipts for cash, using a pre-numbered receipt book – Any time a customer pays with cash, whether in the office or in the field, they should receive a written receipt. This protects the company, the employee, and the customer. Please keep in mind that failure to report income is a federal offense and they can, and will, put you in jail for it. It’s very tempting to put a cash payment in the owner’s pocket and/or use it for a company function. Don’t do it! You will sleep better at night and will have zero concerns if you are ever audited.

Again remember, the overall responsibility of the business rests squarely on the shoulders of the owner. It’s your money so keep a close eye on it. Creating proper checks and balances will safeguard the company and protect the employees from unnecessary and/or unwarranted accusations.

Bottom line, everyone can sleep at night.

Tom Grandy
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Posted In: ACCA Now, Money

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