In December, 2017 two California nuns were caught embezzling $500,000 from the education and tuition fund of the St. James Catholic Church in Torrance, California. The used the money to gamble in Las Vegas!
Two significant details:
1. It took a change in leadership to find it because the school had always operated in the black and no one suspected anything.
2. The nuns discovered a “forgotten bank account” that was set up by the school in 1997 and used it to deposit some of the tuition money.
So, if nuns, who are supposed to be trustworthy and beyond reproach, can steal, anyone can steal – your mother, your sister, your brother…anyone – even a family member.
If it is your name on the door, then you are responsible for every dollar that comes in and goes out of your business. Yes, you delegate the day-to-day bookkeeping responsibility. However, as Ronald Reagan so aptly put it, “trust but verify.” This means looking at your bank account every day, reviewing financial statements every month, and watching the checks that you sign. You review your bank statement that is sent to your home. And please, no signature stamps!
Since it is the start of a new year, start by making sure that there are no “forgotten bank accounts.” This takes a trip to the bank to make sure that there wasn’t an account that was opened in 1997 that has a little money going in and out. These amounts are so little compared to your daily cash inflow and outgo, that you don’t notice it. However, $25 per week is $1,300 per year…for how many years?
If your bookkeeper suddenly quits or you get that nagging gut feeling that something is wrong, get an external audit by your CPA or another person schooled in auditing. Do not do an internal audit. That’s like the fox watching the hen house.
Email me if you’d like my bookkeeping test (firstname.lastname@example.org) to find out whether your bookkeeper really knows bookkeeping.
Remember – if a nun can steal – ANYONE can steal.