I’m no forensic accountant, but I’m currently embroiled in a financial fraud case.
A general manager started a new position at a club and was given the “good news” that he didn’t need to worry about it – “John” had taken care of it for years, so he’d keep doing that.
General managers have got plenty to do, the accounts all seemed to be up to date, so he was happy to leave it to John.
Then the power bill came in, which was a bit of a shock, seeing as it had gone up from £1,500 a quarter to £77,000. It was quite the jump.
Then another demand came in – apparently, the club owed an additional £120,000 and hadn’t paid the energy bill for a long time.
“We need to talk”, says John.
It turns out he’d changed all the supplier bank accounts in the system to HIS bank accounts.
Xero had reconciled it all. Everything was perfect, except the suppliers weren’t getting paid.
John was.
He was “dealing” with all payment demands either by ignoring them or claiming cashflow issues and pleading for patients.
It then transpired that John had a very serious gambling addiction. £600,000 worth.
He’d got away with it for a long time because he never took holidays and never let anyone else touch the books or the bank accounts.
My response?
A simple explanation that it is standard practice for finance workers to be required to take two weeks off in a row.
The silence on the other end of the phone made me realise that while I’d assumed this was widely known, it’s probably not.
So, I thought I’d let you know, too!
The compulsory two-week holiday rule was first proposed in 2008 after Jérôme Kerviel, a trader at Société Générale, lost over $7 billion of the bank’s money in 2007. He later admitted that he hadn’t taken a single day of vacation that year because he didn’t want anyone else to look at his books.
It’s now standard practice at the banks that all staff take those two weeks off every year.
Without remote access to their work accounts.
If you have bookkeepers, finance directors, or anyone who has access to your books, especially access to make payments, you absolutely should make sure that they are away for two consecutive weeks every year and that someone else takes over and does the role for that time, even if it is a freelancer.
Don’t leave it to John.
