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Art of Accounting: How to prevent an embezzlement at a client

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Suppose there was an embezzlement at a large client: What would you wish you had done to stop it? Would you have wished you did that as part of your regular work or your audit? Or would you have wished you suggested those steps as an added service?

Things happen and sometimes they are beyond our control, but sometimes not. Usually the first reaction when there is an embezzlement is to think about whether it was your fault, whether you missed something, or whether there is something you could have done to catch it or perhaps stopped it from occurring.

Now, I know it hasn’t happened to you, but put yourself in this mindset. And then figure out if this should be part of your regular work and make sure those steps will be done. If this is beyond the scope of your regular work, then draw up a proposal to perform a special assignment to close the weaknesses. In your proposal, identify the issues, dangers and consequences of an embezzlement, why it is not part of your regular assignment, your fee and the time period it will take. The value of this added work should be clear to the client, so getting this work should be pretty much a lock.

I receive a lot of calls from accountants who ask how they could move into consulting. The above illustrates one way it can be done — and how easily. Further, the part that should be done as part of your regular work is not separately billable, but there might be some elements that are beyond the scope of your regular work, and that is what can be proposed on. One thing that would not be part of your regular work would be assistance implementing any changes.

Some of you will be thinking that I also just added work to your job. Well, if you are not doing these steps and should, then you might have a disaster in the works, so add them in. Otherwise, go for the added engagement. You will be doing the client, and yourself, a favor.

Do not hesitate to contact me at emendlowitz@withum.com with your practice management questions or about engagements you might not be able to perform.

Edward Mendlowitz, CPA, is partner at WithumSmith+Brown, PC, CPAs. He is on the Accounting Today Top 100 Influential People list. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz, and “Managing Your Tax Season, Third Edition.” He also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com along with the Pay-Less-Tax Man blog for Bottom Line. He is an adjunct professor in the MBA program at Fairleigh Dickinson University teaching end user applications of financial statements. Art of Accounting is a continuing series where he shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. He welcomes practice management questions and can be reached at (732) 743-4582 or emendlowitz@withum.com.

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Embezzling Fraud Fraud detection Accounting firm services Ed Mendlowitz
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