Question

The accurate reporting of the accounting and finance functions of the new business is an important consideration to the new small business owner. The reports compiled for the business are used for an industry comparative analysis, calculate financial ratios, and to project the future earnings of a business. What happens if there is an error or incorrect reporting in those statements?
Obviously, the business owner should investigate the issue to discover if there was an error, transposition, or another form of human oversight. In certain cases, innocent errors are made in the reporting process and the responsible employee apologizes to the boss for the oversight that resulted in the error. However, in other cases, there are dishonest individuals working for the business who cause the firm to report incorrect data as a result of embezzlement, employee theft, or an additional dishonest circumstance.
The “FBI investigates cases resulting in indictments and convictions of corporate criminals (Federal bureau of investigation) related to workplace crimes. The results found indicate that there are many dishonest employees who steal from their employers. The business owner needs to create a keen sense of awareness in reference to employee theft and other dishonest practices associated with the financial reporting process.
Discussion Questions
1. What would you do if you were a small business owner and you discovered that your accountant was embezzling funds from the business as shown by your analysis of liquidity ratios?

2. As a business owner, what are some of the precautions that you could take to assure accurate reporting in your financial records?

3. Would you report such theft to the authorities? Why of why not?

Answer 1

Answer :

1. If i was a  small business owner and i discovered that our accountant was embezzling funds from the business as shown by our analysis of liquidity ratios i have surely fired him from my business and put him behind bars i.e. in jail and also penalise him.

2. Some of the precautions that i could take to assure accurate reporting in our financial records are :-

• Zero-tolerance policy:- Businesses should make it clear that they have a zero-tolerance policy when it comes to embezzlement, That means no prior warnings or second chances after an offense, and employees should sign disclosures that indicate they understand the policy.
• Personal responsibility:- Assign personal, financial responsibility to specific persons for accounting roles and make it clear they are responsible should any money come up missing. This accountability should be in writing and clearly stated before any accounting responsibilities are undertaken.
• Limit cash:- Limit the amount of cash available at any given time to ensure the amount of cash at risk at any given time is minimized.
• Cameras:- Recordings are one of the best ways to have an ongoing record of the goings-on inside the workplace. Use security cameras over the front desk, optical areas, front door, parking lot (to help tie a face to a documented license plate-which is what allows for prosecution), and other important areas of the business. Record all activity and make it known that everyone is under surveillance.
• Internal security systems:- You can receive text alerts whenever somebody trips a silent alarm placed on doors, cash boxes, or server rooms.
• Biometric cash box:- Because cash leaves no trace, it's especially easy to steal from a cash box. Biometric cash boxes-ones which require a fingerprint or other biological marker to open-make it easy to know who had access to cash and at what times. Such information can then be compared to balances to help track when money was added or removed.
• Bank and check access:- Restrict bank and check card access; only trusted owners should be able to write checks.

3. Yes, I would surely report such theft to the authorities because by reporting such theft other people in the industry can get aware about it and take corrective actions to stop such kind of fraud and embezzlement of funds. Moreover it will act as an example for employees joining after particular incident. If such embezzlementare not reported than it will encourage employees to commit fraud and get escaped. Which can lead to high business losses.