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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 because bookkeeper can easily manipulate your financial records. So, here are the red flags when it comes to trusting bookkeeper for your retail business.
Accounting and financial fraud can be crippling for any retail business and surprisingly these are not rare occurrences. In fact, it is quite common and if as a business owner your fingers have been burnt once, it is time that you recognized the red flags to ensure that such a possibility does not arise again. To be sure, it is necessary that you are fully conversant with the procedures and processes followed by bookkeeping outsourcing services so that you can compare them with what is happening in your workplace. It will also help you to put in place a system of checks and balances to guarantee the authenticity and genuineness of your books of accounts.
In this article, the focus will be on knowing the actions of your retail accountant that should arouse an element of suspicion in your mind. Further, it will also be worth your while to know how you can avoid these possibilities when you outsource retail bookkeeping services.
Here are five pointers that should be entrenched in your accounting department and in your bookkeeper, absence of which should set off alarm bells in your mind.
1. A network of checks and balances to offset frauds –
This is the very basics of any accounting system. However, it is often seen that a retail accounting service provider often deals with the whole accounts process single-handedly. If this is prevalent in your business, it is quite likely that at some time you can be a victim of fraud or at the bare minimum error-filled books of accounts and wrong financial reports. The problem is compounded by the fact that you will hardly ever have time to check the books of accounts and make sure that they are balanced periodically.
Alternately, the work of an external bookkeeper or accountant is overseen by a supervisor who checks all heads of accounts and books thoroughly. This double check largely minimizes the possibility of errors and frauds.
2. Following set procedures as per client input –
Most accounts departments in retail businesses are loosely structured without any definite procedures and policies in place. This often results in books not being balanced periodically leaving the business open to scams.
On the other hand, bookkeeping outsourcing services that you might opt for will have set procedures in writing based totally on your requirements and incorporating definite accounting processes that you want them to follow. This document or manual is actually a road map that details generation of reports, timelines for delivery of statements and all other accounting processes. It is client specific and followed scrupulously.
3. Bookkeeper takes paid time off from work –
A retail accounting services provider like any other staff will take time off from work and proceed on vacation. One that never does so is not being overly loyal to your organization. Instead, it should be deemed to be a cover-up for a swindle that he/she is afraid to expose to those taking up the work during the leave period.
However, all external agencies offering accounting back office services have full-time professionals with paid leave and perks. Further, all accounting processes are strict as per the written agreement with the client with double checks in place, thereby fully negating the chance of error-prone or fraudulent transactions.
4. Highly secured work environment –
Your in-house accountant might make the retail business open to fraud, not necessarily willfully but through negligence too. Keeping the computer on without password protection or the drawer containing checkbooks open while away from the seat are some examples.
But bookkeeping services are very strict on this score. Not everybody can copy or download files of clients and those that do always work in two’s as extra precaution. Virtual checking and payments is the norm adding to a heightened security level. It’s virtually impossible to replicate these security policies in an office.
5. Closing books of accounts –
This is a crucial procedure, more commonly known as the finalization of accounts for the year. The full business financials and business and investment decisions are based on the reports generated. Hence, it is imperative that it be fully secured and accurate right down to the last figure.
When you outsource retail accounting and bookkeeping services, the agency will review all heads of accounts meticulously and match all transactions with bank receipts and bank and credit card statements. When they are fully satisfied with the output, you will be asked to scrutinize the same and give your approval for “closing the books”. You can be sure about the accuracy and preciseness of your final balance sheet.
Given these benefits as well as eliminating the possibility of frauds should be enough incentive for you to opt for retail accounting outsourcing services for your company. One of the leaders in this field is Cogneesol. Our team of trained accountants has the expertise and professionalism to ensure that your accounting system and the data generated is fully secured and precise. For more, call +1-833-313-3143 or write to [email protected].
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