How to Spot a Financial Accounting Fraud

Here are some signs of a possible dishonest employee:

1. Never wants to take a vacation.

There's a reason, and it's not workaholism. Bookkeepers behaving badly like to be in a position to intercept phone calls and correspondence. And as for the boss rifling through their desk to find something when they're out of the office -- that would be unbearable, of course!

2. Always has more work to do than can possibly get finished during normal working hours

So much, in fact, that they have to stay after everyone else goes home. Or, if you'll let them, they like to take the work home. This might not be the loyalty you expect: unsupervised work lets the bookkeeper tamper with records with less chance of discovery.

3. A tattletale. Likes to point out incompetence of other employees.

Pointing fingers at others puts an alibi in place, should you discover something amiss. Dan doesn't collect all his accounts. The deposit seemed too small? (It's Dan). Sharon hangs around the office when she doesn't belong there. There is postage missing? (Could be Sharon) Linda is disorganized. Why is this letter misfiled? (Linda is sloppy) Maybe the bookkeeper deposited some of Dan's deposit in her own account, and also purloined the postage. Linda's letter might be misfiled because the bookkeeper didn't want an auditor to see it.

4. Volunteers to take care of details that should be handled by the principals -- helping by picking up signature cards when you open a new bank account, for example.

The more details the bookkeeper handles, the more opportunity for sticky fingers, and the easier it is to cover things up.

5. Likes to pick up the mail, even if it makes more sense for a lower-level employee to take on that task.

The mail is both tempting and frightening to employees who steal. Checks come in the mail. So do unexpected notices that might tip you off to their theft.

6. Acts like bookkeeping tasks are as difficult as brain surgery, and twice as complex.

I dump any bookkeeper who can't explain things to me in terms I can understand. That goes double for accountants who respond to my nosy questions by taking offense. --She acts like she doesn't TRUST me!-- Yes. When they guilt trip you, watch your back.

7. Tells little fibs, perhaps unrelated to accounting

Little lies tell big stories about people's character.

8. Seems to feel that the company owes something; as if he has done more than could be expected of any reasonable person

In fact, most employees who take things really DO believe the company owes it to them. They may start by ...well, borrowing... then justify turning it into a theft by deciding you don't pay them enough.

9. Prints in precise, tidy letters, but can't seem to find things when you ask; shuffles some things into messy little piles.

Aha! This is a really good tip-off. People's habits aren't usually so schizo -- they are either consistently messy or compulsively tidy. Accountants, more often than not, fall into the tidy category. If you've got one that's tidy and messy at the same time, start spot-checking everything that looks messy.

10. Volunteers to take the following things off your busy shoulders:

1) Interfacing with auditors 2) personally making the police report if an item turns up missing 3) IRS correspondence.

How to Reach a Goal Faster

1. Install a consequence that really, really hurts!

2. Hire a short term coach who will help you make it happen.

3. Break the goal down into important pieces and enjoy the momentum as you accomplish each one.

4. Link the goal to one of your values so that it becomes an expression of yourself vs just this 'thing' that you're working on.

5. Know the next goal you want to accomplish, even before you have fully started on the immediate goal; this creates perspective and context, making the current goal look much easier!

6. Find a way to be rewarded as you go; a runner sips water continually; she doesn't gulp it down at the end.

7. Start feeling and acting as if the goal has already been reached and then just do what it takes to 'finish' it.

8. Eliminate the consequences of non performance and just work on taking daily actions instead -- get your juice from taking the actions vs comparing to the goal.

9. Set an earlier end point and orient everything around reaching the goal by then.

10. Change the goal so that it CAN be reached easily -- who says you should pick only the tough goals.

Why do some Business managers reach the profit goal more often than others? They do it because they keep their operation pointed
in this direction - management of profit making. They never lose sight of the goal - to complete the year with a profit.

This guide Gives suggestions that should enable an owner-manager to zero on profit earning. It points out that you have to stay
educated, make timely decisions, and take effective action. In effect you need to control the actions of your company instead of
being controlled by them.

Topnotch Functionality in golf, shootingfishing demands understanding, practice, and perseverance.

Similarly, in Small businesses, year-end profit comes to the owner-manager who tries for topnotch performance. You attain profit
making goals by knowing your operation, by practicing the art of making timely, balanced judgments and by controlling the
organization's actions.

Adapt the Suggestions in this guide to your circumstance. They ought to help you call the shots to maintain your business headed
in the right direction - toward profit earning.

First Rule of Profit Making: Know Your Business. The Time-honored truth"Knowledge is power" is particularly pertinent to this
owner-manager of a small business. To maintain your business pointed toward gain you need to keep yourself well informed about it.
You have to be aware of how the organization is doing before you can improve its performance. You have to know its weak points
before you can correct them. Some of the information you need you pick up from day-to-day personal observation, but documents
should be your principal source of information about profits, expenses, and sales.

Know Your Profit. The gain and loss statement (or income Statement) prepared regularly each month or each quarter from your
accountant is one of the most essential indicators of your business's worth and wellbeing. You should be sure that this statement
contains all of the facts you need for assessing your profit. This announcement must pinpoint each earnings and cost area. By way
of example, it should demonstrate the profit and loss for each of your products and product lines as well as the profit and loss
for your whole operation.

It's a good Idea to have your profit and loss statement prepared so that it reveals each product for the current period, for the
same period this past year, and for your current year-to-date. For instance, a P&L statement for the month of November would show
income and expenses for the current month, for November this past year, and prices for the eleven months of the present year. Many
businesses publish their annual reports with several previous decades therefore stockholders can compare earnings.

Comparison is The trick to using your P&L statement. If your accountant is not already supplying figures that you may compare, you
need to discuss the possibility of having them provided.

Financial Ratios out of your balance sheet also help you to understand if your gain is exactly what it ought to be. As an example,
the proportion of net worth (return on investment ratio) shows what the company earned on the equity capital invested.

Know Your Costs. An owner-manager ought to know costs in detail. Then, you can compare your cost figures as a proportion of
earnings (operating ratio). Be sure your costs are itemized so you can set your fingers on those that seem to be climbing or
falling according to your experience and the price figures of your industry. When costs are itemized, you are able to spot the
culprit when the general figure is greater than what you'd budgeted. Take advertising costs such as. It's possible to catch the
offender if you split out your advertising expenses by product lines and from media. In addition, a thorough check of question
returns from advertising will help to avoid unproductive books.

In knowing your Prices, remember that the formulation for profit is: Profit equals Earnings minus Costs.

Know Your Product Markup. Be certain That the pricing of your goods provides a markup adequate for the sort of profit you expect
to achieve. You must keep constantly informed on pricing since you have to adjust for increasing costs and at the exact same time
keep prices competitive. Knowledge about your markup also can help you to run workouts with your eyes open. Continuing to generate
something which only a few clients desire is a powerful merchandising tool only once you use it on purpose - for example, to hold
or draw buyers to other high markup products. Don't hesitate to shed a loser out of your line.

Garbage-In, Garbage-Out. An Owner-manager shouldn't fudge the records. The acronym GIGO that the computer business uses is true
with manually stored records in addition to with machine-processed ones. If an owner-manager allows"garbage" to enter the records,
the reports will include"garbage." Reports do not need to be extensive but they must be accurate.

Look For Trends. Try not to look at one month's sales or Profit image by itself. The characters in your working statements are
significant only when you put the picture in the ideal framework - that is, look in the figures in the context of what's happened
and what is likely to happen. In that manner, you grab a downward trend before it gets out of control.

You should also Concern yourself with the figures behind the bucks - for example, the amount Of units offered or the number of
orders. Insist on cost-per-unit statistics. The Fluctuation of the cost-per-unit can be much more meaningful than just looking In
the dollar figures alone. Another idea is to exhibit these comparative Figures on charts so that important trends can be viewed
easily.

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