Tax Professionals: How Do You Protect Your Practice and Clients From Dishonest Employees?

Use the stuff you learned in CPA firms 
Checks and balances. No one person should be taking any task all the way through. For instance, someone else should always be reviewing the work. The person making deposits and paying the bills should not also be reconciling the bank accounts. 
 
When it comes to tax returns, the firm’s owner should take one last look before the tax return is filed. After all, his firm’s name is on that tax return. 
 
In fact, I am so concerned about misdirected electronic deposits (it’s so easy to innocently transpose digits) that I insist on taking a special, extra step. After the return is prepared, before it is e-filed, we have the client sign off that they have reviewed the bank account number (routing, etc.) and that it is correct. I’ve had too many readers or tax pros come to me after their deposit got misdirected –- and they faced a nightmare getting the money back. 
 
But back to the employee deposit theft issue... 
Let’s face it, we all work with numbers. Doing that, we often start seeing patterns. Sometimes consciously; sometimes subconsciously. Wouldn’t you notice if the same last four digits kept showing up on refund deposit field in several of the tax returns in the stack you were reviewing? I would. Of course, I might not notice the first ten or twenty times (over several days). But by the thirtieth time, some niggling thought would start itching at the back of my mind. I’d start to go back and look. And uh oh! I would find that same number appearing. 
 
Incidentally, although Rowlette warns us to watch out for staff taking expensive vacations, I learned to watch for just the opposite problem. The dedicated employee who never takes a vacation. A special employee theft guide for doctors’ offices (from way back in 1980) pointed out why this is a danger. This employee never takes time off because he/she doesn’t want anyone looking at his/her records. Over ten or twenty years, there might be a substantial amount of embezzling going on. 
 
Why do employees steal? Of course, some people are simply dishonest. Sometimes it’s because of financial need, like the fellow in this article. Often, it’s due to resentment because they haven’t gotten a raise in a long time, or promises you made were not kept. Or you’re living really well –- but they feel they are doing all the work and are not fairly compensated. Or you’ve been rude or high-handed and they felt mistreated. Or you are disorganized, forcing them to work late when, if you had given out assignments sooner, they could have done them during regular office hours. 
 
Sigh, it sounds like you can’t win. True, you cannot do it all yourself. But, generally, when you pay close attention –- and truly care about your staff and their welfare -– you reduce the desire or need for theft. Or take some courses? And don’t forget to implement common-sense checks and balances.
 
What are you doing to keep your clients and practice safe? 

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