Collusion with counterparties, money transfer to front accounts, checks on personal expenses, payroll accounting to "deadheads"- this is just a small list of how an accountant can deceive and steal from a business owner.
Loss of the base
One of the main risks for the owner happens in a situation where the accountant keeps records on his/her personal computer and only he/she has access to the database.
If an accountant’s work does not suit you and you decide to part with him/her, he/she may not give you the archive base or start demanding money from you. In this situation, you will be forced to restore the entire accountancy. If the volume of transactions was not very large, it would take a little while, but just imagine how long it would take if a company had hundreds of transactions worth several tens of millions a year.
How can you prevent this?
You need to use cloud accounting and not lock the whole process into one employee: a password should be kept both by him/her and you, and all notifications should be sent to your email.
Tax overpayments and other mistakes
All too often business suffers not only from the bad-faith actions of the accountant, but also from his/her inattention, incompetence, laziness, or fear. As a result, the company may pay much more tax than it should.
Sometimes accountants just miscalculate taxes. But, quite often, they consciously act according to the principle «it is better to overpay, anyway, when the tax agency comes it will find something and charge it».
Very often, despite all available documents, accountants prefer not to apply to a tax agency for a VAT refund, just fearing «what if they find something when inspecting».
They may refuse to formalise travel or hospitality expenses such as going to a restaurant for a business meeting if the payment is made in cash.
Sometimes just tiredness or family problems can lead to trivial mistakes in payment orders or to the double sending of the same payment.
What is to be done?
Problems often arise from the accountant’s lack of information on planned and incurred expenditures. Therefore, it is important to develop proper working relationships/communication with all employees of the company and to introduce electronic document flow as a standard of work.
To minimise risks of mistakes in payment orders or double payments, it is better not to provide the accountant with an access key to the system «Client-Bank» and to sign the documents yourself.
Another useful measure is an external audit, which can be carried out quarterly to be sure that there is nothing the matter (or timely identify and correct errors), or the conclusion of a contract for the provision of accounting services with the agency whose liability is insured. In this case, the insurance will cover the losses in case of overpayment or additional taxes.
Unfortunately, in real practice most often steal those who are directly connected with counterparties. However, if an employee colludes with an accountant who independently makes all the payments and submits statements, he/she will have an opportunity to withdraw part of funds to his/her individual entrepreneur or LLC, "make a drawing of" a statement and falsify issues to prevent you from finding out about anything.
Ways to avoid this:
Set up a receipt of notifications about the submission of reports.
Independently sign documents (contracts, orders for the payment of bonuses).
Do not provide the accountant with the right to sign in the Internet Bank.
Use of information about your business
An accountant is a person who knows almost everything about your business, so many fear that he/she can transfer information to competitors or use information about the company's activities by writing a complaint to the regulatory authorities.
How do you know if the candidate is good when hiring
You should not invite a person whose resume contains mistakes to an interview. If there are not enough dots or letters, there are inaccuracies in dates and names - this is a confirmation of inattention, lack of commitment, and lack of pedantry, which is very important for an accountant.
If a candidate is unpleasant and it is difficult to communicate with him/her, it is unlikely that you will be able to build a trusting relationship, in which you will be respectful of him/her and his/her work and he/she will always act in the best interests of the company.
Be scrupulous about hiring an accountant. Remember, if an accountant makes gross mistakes in the resume or is unpleasant to you as a person - you should not entrust him/her bookkeeping.
Discuss planned transactions with your accountant and provide information about the transactions on time. If you treat your accountant and his/her responsibilities just formally and present him/her with faith, it is highly unlikely that he/she will have any incentive to act in your best interest.
You should not afford an opportunity and give a reason to steal, do not give your accountant full access to the "Bank-Client" system.
Remember about outside scrutiny. Do reconciliations with a tax authority to make sure you are not in debt or overpaid, and contact consultants for an external audit.
If you can't find and supervise a general accountant yourself, contact a trusted accounting firm (Info about Jara Accounting).