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Can You Trust Your Retail Bookkeeper? Know the Red Flags
It is difficult to detect fraud, especially when your bookkeeper is the culprit. So, here are the red flags when it comes to trusting a fraud retail bookkeeper.
Accounting and financial fraud can be detrimental to any retail business, and regrettably, such incidents are not uncommon. In fact, they are quite prevalent. If, as a business owner, you’ve experienced the repercussions of fraud, it’s crucial to recognize the red flags to prevent a recurrence. To achieve this, it’s imperative to have a thorough understanding of the procedures and processes employed by bookkeeping outsourcing services, enabling a comparison with your in-house practices. This knowledge serves as a foundation for implementing a robust system of checks and balances, ensuring the authenticity and accuracy of your financial records.
This article aims to shed light on actions by your retail accountant that should trigger suspicion. Furthermore, it provides insights into avoiding these issues when opting for outsourced retail bookkeeping services.
5 Red Flags that you Hired a Fraud Retail Bookkeeper
1. A Network of Checks and Balances to Offset Fraud
This forms the cornerstone of any accounting system. However, it’s observed that retail accounting service providers often handle the entire accounts process independently. If this is the case in your business, the risk of fraud or, at the very least, error-filled books and inaccurate financial reports is elevated. The challenge is compounded by the limited time available to scrutinize the books periodically.
In contrast, external retail bookkeepers or accountants work under supervision, where a thorough check of all accounts and books is conducted. This double-check significantly minimizes the chances of errors and fraud.
2. Following Set Procedures as per Client Input
Many accounting departments in retail businesses lack structured procedures, resulting in irregular balancing of books and susceptibility to scams. Outsourced bookkeeping services, on the other hand, adhere to documented procedures based entirely on your requirements. This document serves as a comprehensive roadmap detailing report generation, statement delivery timelines, and all other accounting processes. It is client-specific and meticulously followed.
3. Bookkeeper Takes Paid Time Off from Work
A retail accounting services provider, like any other staff, should take time off and go on vacation. An individual who avoids taking leave may not be demonstrating loyalty to your organization; instead, it could be a cover-up for potential wrongdoing that they are hesitant to expose during their absence.
In contrast, external agencies providing accounting back-office services have full-time professionals who enjoy paid leave and perks. All accounting processes strictly adhere to the written agreement with the client, incorporating double checks to eliminate the chance of error-prone or fraudulent transactions.
4. Highly Secured Work Environment
An in-house accountant might inadvertently expose the retail business to fraud, whether willfully or through negligence. Practices like leaving the computer unprotected or keeping checkbook drawers open while away pose risks.
In contrast, bookkeeping services enforce strict security measures. Access to client files is restricted, and those handling sensitive tasks always work in pairs as an additional precaution. Virtual checks and payments are standard practices, contributing to an elevated security level that is challenging to replicate in an office setting.
5. Closing Books of Accounts
This critical procedure, commonly known as the finalization of accounts for the year, is the foundation for business financials and investment decisions. Therefore, it is imperative that it is secure and accurate down to the last figure.
When outsourcing retail accounting and bookkeeping services, the agency meticulously reviews all accounts, matching transactions with bank receipts and statements. Upon their satisfaction with the output, you are invited to scrutinize and provide approval for “closing the books.” This ensures the accuracy and precision of your final balance sheet.
Given these advantages and the elimination of fraud possibilities, there is a substantial incentive to opt for retail accounting outsourcing services for your company. A leader in this field is Cogneesol. Our team of trained accountants possesses the expertise and professionalism to ensure the security and precision of your accounting system and generated data. For further information, call +1-833-313-3143 or write to [email protected].
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