Interesting Workplace Incident (A must read)

I have a group of clients that own several businesses around town. Two from this group, with several outside investors, own a supper club near my office. They called me in to handle taxes and consulting. It was terrible from the start.

Once they bought the supper club, they hired a manager. This was a guy they knew from running some income properties they owned. 

The manager and his wife handled the books.

The club was open for a bit before I was called in. I would review the books monthly and consult before preparing the annual corporate tax return.

I was to meet with the manager. When I arrived, it didn’t take long to know something smelled terrible. From the front door to the bar was all it took for me to know embezzlement was rife.

The bartender gave me a cold attitude. There is no reason an employee of a business client should ever give the accountant a perspective. This told me the employees knew or suspected the malfeasance. The environment was terrible.

I was shown to the office where I waited as the manager was running late.

I noticed a gap in the security cameras between the back office where I was and the safe. 

When the manager arrived, he was livid. He made it clear I was never to touch the books unless he or his wife were present.

After the meeting, I called one of the owners. I told him he had severe misappropriation of funds issues. I told him it was the manager bleeding him dry.

I was assured the manager was a good guy. I pointed out:

1. The bartender’s attitude was unusual to see. Employees should care less if the accountant shows up. They should have been more interested in serving me a drink, hoping for a tip.
2. The security camera gap between the office and safe was a severe issue.
3. Any manager who is that adamant the accountant does not see the books without supervision is practically an admission of guilt. There is only one reason to control what the accountant sees.

I knew who was embezzling (manager), where they were doing it (security camera gap near the safe), when they were stealing the funds (at closing the manager or his wife handled the money with no oversight) and how much (I estimated between $100,000 and $150,000 based on revenue).

When I was not taken seriously, I said I was not interested in the account and hoped it would not affect my other stores. 

A year later, one of the owners was in my office. It seems I was wrong. The manager was embezzling just as I said he was, except he misappropriated at least $300,000.

I reminded my client he probably did the same when he was managing their rental properties, which always seemed to lose money, too.