Case Study – Sharon Hess, CPA: Embezzlement

Challenge/Situation

The bookkeeper of a construction services firm – and a Goldin Peiser & Peiser client – was using the company’s QuickBooks to print company checks to herself, which she then forged using the signature of an authorized signee. On each occasion, she would then record the payee as a valid entity—usually different firm vendors. This process reoccurred over a period of a year and a half and totaled nearly $70,000 in fraudulent activity.

Our Approach/Solution

The bookkeeper eventually went on leave, at which time the business owner asked Goldin Peiser & Peiser’s Accounting and Consulting team to reconcile the banking and perform other accounting functions. In our first month, we discovered two checks on the bank statement that weren’t entered into QuickBooks. We asked the business owner about these, and he confirmed with the bank that they were made out to the bookkeeper. He did not seem overly concerned at first, and while conceivably, these could be construed as being legitimate, that was a warning flag to us, which compelled us to dig deeper. At that point, we examined the QuickBooks Audit Trail and discovered the full extent of the fraud.

Results

Goldin Peiser & Peiser worked to reconcile all relevant financial information and secure all necessary documentation of the fraud for the client, who subsequently confronted the bookkeeper upon her return to work. Where previously adequate segregation of duties did not exist, Goldin Peiser & Peiser suggested proper controls and procedures. Additionally, we now visit the client regularly to review all financials with the business owner and designated representatives. Moving forward, Goldin Peiser & Peiser also recommended that the client have the bank prepare bank statements with check images of all cleared checks.


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