DEAR ABBY: I read the letter from "Depressed in Texas" about her concern that her husband's business partner was stealing from them. I agree with your advice about having an independent CPA set up the accounting system, and consulting an attorney if the partner does not agree.
However, "Depressed" did raise a warning to other business owners. Whenever a person in charge of the records limits access to the records, it may be a red flag denoting fraud.
Our firm specializes in forensic and investigative accounting. Over the years, our partners have audited thousands of claims for fraud and employee dishonesty. The comment we hear most frequently: "That guy was my trusted friend." It can happen anywhere, at any time.
As a service to your readers, the following is a list of some other "red flags" business owners should look for indicating fraud or employee dishonesty:
-- Excessive drinking or gambling
-- Refusing access to records
-- Rewriting records for "neatness"
-- Coming into a "sudden inheritance"
-- Skipping vacations
-- Overriding internal controls
-- Attempts to dodge or direct an internal audit
-- Working regular overtime
-- Carrying excessive cash
-- Bouncing personal checks
-- Turning down promotions
-- Maintaining a high lifestyle
-- Has check-signing authority
-- Intimidates staff and other co-workers
Abby, theft is a serious problem costing society billions each year. The costs are always passed on to the consumer in the form of higher prices. If someone suspects he or she is having this kind of problem, it is best to contact an accountant or attorney who specializes in this area. Often an experienced fraud examiner can perform an audit without the knowledge of the alleged embezzler. A CPA can be helpful in implementing internal controls that will lower the risk of fraud. -- HENRY H. KAHRS, CPA, CERTIFIED FRAUD EXAMINER, ORANGE, CALIF.
DEAR MR. KAHRS: Thank you for an eyebrow-raising but helpful letter. I'm sad to say the business partner that "Depressed in Texas" complained about has exhibited at least two of the warning signs you listed. As a service to business owners, I'm printing your letter in its entirety.