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Be alert to signs of accounting fraud

If you have a significant amount of assets or run a small business, you probably have an accountant.

Whether that accountant is an individual working out of a home office or a member of a group -- the moment you put your money in someone else's hands to manage, you're at risk of being defrauded.

The good news is that it rarely happens. Most accountants are honest, reliable souls that won't steal from you or any other client.

However, fraud does occur. Take the case of the president of a Maryland wealth management and tax company who recently pleaded guilty to defrauding a major client out of more than a half of a million dollars.

This wasn't a little, unknown firm -- nor was it just some nameless, faceless member of a tax team. It was the man who had been in charge of the accounting firm for nearly a decade.

He siphoned the money off slowly, almost from the time he took over as president. He used about three to four wire transfers per year to send "bonuses" or pay "management fees," among other things -- none of which were authorized.

The article doesn't say how the fraud was finally detected, but there are some common signs that you should know:

  • Transfers of funds for "bonuses" you don't recall authorizing
  • Mysterious handling fees or charges that you neither remember or understand
  • Documents that are incomplete, including gaps in check numbers
  • Invoices going to or from companies you don't recognize, those that have a P.O. Box or always bill in exact dollars amounts (no change)

While there are other signs as well, the essential thing to remember is that if something feels wrong to you -- it's time to ask questions.

If you've been the victim of a negligent accounting practice and have suffered losses as a result, an attorney can provide assistance. Our firm has attorneys with experience in that area that may be able to help.

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