Small and medium-sized firms were particularly vulnerable, as they often depend upon a small number of employees to carry out key functions such as invoicing, paying suppliers, and bookkeeping.
Identifying and preventing employee fraud is a major headache for UK businesses.
Equipment Manufacturing Firm Bookkeeper: £8,614
In July 2014 Claire Louise Walker, a 44 year old bookkeeper and mother of two, was given a 150 hour community order by York Crown Court after making six unauthorised bank transfers to herself amounting to £8614 over a two year period. When her employers queried the final £2,400 transfer, Claire produced faked documents from Barclays Bank to cover her tracks, falsely indicating that the bank was investigating an account hacking complaint. Her barrister stated that she had financial problems, had suffered from depression, but that other companies were nevertheless still willing to employ her despite knowing about her crimes.
Claire had had sole responsibility for the company’s books for some ten years.
Welding Firm Bookkeeper: £31,302
You may find it surprising that anyone would want to employ a convicted fraudster as their bookkeeper, yet that’s exactly what happened in the earlier 2013 case of Susan Foxcroft. Just weeks before she started to make bogus transfers from her employer’s bank account, Susan had been found guilty of stealing £6,000 from her previous employer, but was spared jail.
In her new employment, Susan dishonestly pocketed £31,302 over a three -year period so was jailed for three and a half years by a Manchester court. She had siphoned the money from her employer’s bank account to her own bank account in bogus bank transfers and payments, and was able to cover her tracks because she alone was responsible for bookkeeping and for issuing payments. The thefts were only discovered when Susan became subject to bankruptcy proceedings, and the insolvency service questioned the large deposits into her bank account.
Even then, she was able to falsify statements from her employer stating these were ‘bonuses’, and for a time managed to intercept her employers’ post to avoid being exposed.
Company Bookkeeper Tax Fraud: £36,404
Back to 2014: in September Judith Auclair, a sixty year old bookkeeper, was sentenced to 15 months’ imprisonment by Guildford Crown Court after pleading guilty to 15 charges. Judith had been responsible for submitting her employer’s PAYE tax returns to HMRC, but over a number of years added bogus employees to the company’s payroll. She falsely claimed £22,181 in tax and national insurance refunds, and diverted those funds to her own bank account. The fraud was discovered as a result of a HMRC visit.
Separately, Judith paid herself £14,223 from the company’s bank account for bogus goods and services. As a parting shot, just after her arrest she still managed to transfer a further £3,398 from her employer’s bank account to her own.
“Starchaser” Bookkeeper: £167,000
In June 2014 Lynn Knott, a fifty-seven year old Tameside bookkeeper, was convicted and jailed for systematically fleecing her employer of £167,000 over a six year period. She was sentenced to two years in prison at Manchester Crown Court. Lynn had been a “highly trusted” employee, responsible for making payments to suppliers. Hundreds of bank transfers, disguised as legitimate payments to suppliers, had been diverted by her to her personal bank account. As a result her employer, space-exploration company Starchaser Industries Limited, was in deep financial trouble and even had to lay-off six staff members – including Lynn herself.
It was only then, upon employing an outside accountant, that the company unearthed the fraud.
Property Company Bookkeeper: £2,000,000 (yes, two million pounds!)
In July 2014 Mirriam Clark, a 47 year old bookkeeper at a real estate company, was jailed for four years by Southwark Crown Court after stealing £2,000,000 from her Bond Street employer with which she built her own property empire. At the time of the trial, only £295,000 had been recovered. The fraud had been carried out over a three and a half year period, in which Mirriam “played a key role” with the company’s bank account and tax affairs.
The deception was only discovered after she had been fired by the company, following an unrelated dispute.
These cases highlight the need to vet bookkeepers before employing them. Here in the UK, anyone can call themselves a bookkeeper (or, for that matter, an accountant) even if they have no training or qualifications. Choosing a bookkeeper or accountant who is a member of a recognised professional body not only gives assurance of having being suitably trained and qualified, but also of having been properly screened.
Having the same employee in charge of key functions such as invoicing, banking, supplier payments, and bookkeeping often invites fraud. One inexpensive fix is to divide key financial duties amongst two or more staff. Even then, in a small firm there is always the possibility that two or more employees may collude to defraud their employer.
A safer division of duties is to outsource the firm’s bookkeeping and payroll to an accredited bookkeeping firm, which acts as a deterrent to employees. They know the key financial duties they carry out are being overseen as part of the bookkeeping function; and that any discrepancies would quickly come to light. If outsourcing your bookkeeping sounds like a good idea, we at Taxsmiths® offer an affordable weekly, fortnightly, or monthly bookkeeping service, individually tailored to keep a tight watch on each of our clients’ finances.
© Taxsmiths® 2015