The Person Who Pays the Bills Shouldn't Be the Only One Who Sees Them
A Rochester Business Journal report on a construction firm's alleged $500,000 card-fraud complaint is a reminder that a single set of eyes on the books is a control gap, not a character judgment.
Prompted by “Rochester construction firm alleges controller embezzled nearly $500K”, Rochester Business Journal (Kevin Oklobzija).
Kevin Oklobzija reports that a Rochester construction firm has filed a complaint alleging that its former controller ran nearly half a million dollars of unauthorized charges through a company credit card.
I don't envy the CEO who has to deal with a crisis like this. As a former CEO myself this gives me agita. I have a lot of sympathy for the leadership team.
What matters here most is the controls. True or not, an event like this costs a business time, legal fees and attention on something that does nothing for growth, and the money may never come back. Trust is important but policies and procedures matter just as much.
So here's the question: do you have the controls in place to protect your company from this kind of loss? How have you prepared?
Who besides your bookkeeper sees the statements?
Whether you're a CEO or an owner-operator, ask yourself who besides the person paying the bills sees your card statements, and where they're delivered.
Ask whether anyone other than your bookkeeper gets the bank alerts. Ask whether one person could create a charge, approve it, pay it and record it.
If the answer is “just one person,” that person is your control. That says nothing about their honesty. It's a gap in the system, and small and medium-sized businesses are the most exposed because there's rarely a second set of eyes. For an owner-operator it's harder still, because you set the rules and work inside them.
Test it out: this week, pull your last three months of card statements and read every line yourself. Do it before someone else does it for you.
Corporate governance is always high on the list of best-practice topics we discuss in OCTET CEO peer advisory groups.
Looking for a place to discuss issues like this with other local business leaders? Join one of our no-cost Rochester CEO insight sessions and test your ideas with your peers.
Originally posted on LinkedIn ↗