No one should ever experience what I recently heard during a recent call from the Police. I received a call asking for information about someone that was being investigated. My name came up in their emails, and the police investigators gave me a call to seek information. The phone call impacted me because this is an issue of such great importance that we have policies and procedures in place to protect our clients. This story serves as a crucial reminder of the importance of financial safeguards.
The Incident
The organization in question had been highly regarded for many years. It provided comprehensive services for associations, including mailings, website management, event coordination, bill pay, and bookkeeping. However, after the business was sold to a new owner, things took a dark turn.
The new owner gained control over the banking accounts of their client, many of which had substantial bank accounts. With the ability to pay bills independently, the owner embezzled millions of dollars from these associations.
Preventing Financial Mismanagement
To ensure this never happens to you, it’s essential to implement strong financial controls. At BudgetEase, we follow strict protocols to protect our clients with the hope that they will continue to use these controls even if they are not working with BudgetEase:
- View-Only Access: Provide your bookkeeper or controller with view-only access to bank accounts. This prevents unauthorized transactions.
- Segregation of Duties: Ensure that the treasurer or president of the organization is the only person authorized to sign checks and move money.
- Approval Systems: Set up a system where bills are entered by the bookkeeper but approved by someone else in the organization, such as the treasurer.
The Impact of Financial Mismanagement
If you’ve ever been a victim of financial mismanagement, you know how invasive and traumatic it can be. Even though the theft isn’t face-to-face, it feels just as deeply personal. Protecting yourself with strong systems is crucial.
Ethical Considerations
It’s also important to consider the ethical implications. You never want to allow anyone to do something they might later regret. Financial pressures, personal issues, or misguided intentions can lead to poor decisions. By implementing robust financial controls, you not only protect your organization but also prevent others from making regrettable choices.
Conclusion
The individual responsible for this embezzlement will face legal consequences. However, the real lesson here is the importance of strong financial systems. Don’t wait for a crisis to implement these safeguards. Protect your organization and its members by ensuring that financial management is transparent, accountable, and secure.
For more information about this topic of fraud check out these other blogs and videos:
- Blog - Protecting Your Business from Scams: Essential Bookkeeping Tips
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Blog - 6 Reasons to Reconcile Your Bank Statement Each Month
- Video - 10 Things Small Business Owners Need to Do, to Eliminate Fraud by Their Bookkeeper.
Here at BudgetEase we feel that strong partnerships and safeguards make for strong organizations. If you need a great bookkeeper and financial services partner, contact us, we are here to help!
