How Should Accounting Practice Owners Protect Themselves From Their Own Employees?

In every accounting practice, employees and clients interact with each other on a regular basis.  It is the responsibility of the Owner to look over how these interactions go and if all the information that had been exchanged is honest and true.  Recently, in a practice in Sacramento, California, tax refunds were being stolen by one of the firm’s employees.  The employee started by stealing small amounts of money as low as $500 and then ramping up to a $4,000 refund.  It turns out that this employee had been stealing for several years without notice.

Firm owners must realize that they will be held liable for any employee theft or embezzlement of client funds. It is important to ensure that you have a comprehensive professional liability policy that includes coverage for employee dishonesty. While we want to believe that all of our employees are loyal, we can never be sure of their future actions.

The real “golden rule” that owners should follow is, get to know your employees. Subtleties on how they are doing at home, what types of vehicles they are driving, or jewelry they are wearing are all potential signs to look for in case you suspect an employee may be embezzling.

Last but certainly not least, the easiest way to protect your firm from embezzlement is to simply follow the rule of checks and balances. Allowing one person to file a tax return by him/herself opens up the possibility of details being overlooked.  Another partner or administrator of the firm should always take one last look before the tax return is filed.  It is just too easy for someone to mistype or make a mistake on a return and therefore it is vital for the firm owner or partners to review returns prior to filing.

For information on California accountant professional liability insurance, give Mitchell & Mitchell Insurance a call at 888-512-8878.

(Source: AccountingWeb.com)

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