Reconcile Company Checking Accounts!
Reconcile Company Checking Accounts immediately when received in the mail. One of my clients, ABC Grocery, was a wholesale grocery “franchisor” that had twelve franchised stores. The franchisor’s accounting department processed the franchisees’ weekly payrolls.
The payroll processing procedure worked as follows:
- Every Monday, each store manager called in their payroll hours for each of their employees to the payroll clerk in the accounting department.
- The payroll clerk processed the payroll and called the store managers with the total amount of funds they needed to transfer to their “impressed payroll checking accounts” to cover their paychecks.
- She then overnighted the checks to each store the next day. The store managers handed out the checks to the employees on Wednesday.
Reconcile Company Checking Accounts – The store’s payroll checking account was mailed from the bank directly to the payroll clerk in the accounting department. No one reconciled any of the store’s payroll checking accounts. When I asked the clerk about the reconciliations, she said that it was not necessary because the bank accounts always equaled zero a few days after the deposits.
As soon as I started reconciling the checking accounts, I immediately found the embezzlement.
Reconcile company checking accounts – I reconciled five of the stores checking accounts for the most recent month. The payroll clerk was correct. After distributing the checks to the employees, the balance always would net to zero in a couple of days. However, while reconciling the account, I noticed that there was one canceled check per week missing, and it was always on the bank statement as clearing for exactly $500.
The payroll clerk put herself on the payroll of every franchise store for $500 per week and paid herself.
When the bank statement came in the mail for the stores, she opened the envelopes and pulled out her four weekly checks. Before I found the embezzlement, she stole $500 weekly from each of the 12 stores or a total of $6,000 per week for ten months. She paid herself approximately $240,000, and none of the stores were aware that they were ripped off by the payroll clerk.
My client did not prosecute the payroll clerk. They couldn’t because she did not steal their money. She embezzled the franchisees’ funds. My client could not tell the owners of the franchises about the theft either. If they did, the franchise owners would not trust the franchisor ever again. The company fired the clerk who stole the money and her manager. They also terminated the corporate controller and the General Manager for allowing the theft. The company replaced the money to all the checking accounts for the franchises. They told them that there was an accounting error and they all had a $24,000 credit for the next payroll.
Because the company did not have control over their checking accounts, the company lost a quarter of a million dollars.
My name is Robert Curry, and I am an Author, CEO Coach, Keynote Speaker, and Turnaround Specialist. Over the past 20 years, I have worked with more than 70 companies taking their businesses from Loses to Profits.
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