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Fraud - It Can Happen to You
CPAs are often thought of as the trusted advisor to their clients. To have credibility in advising my business clients, I must run my accounting practice like a business—and I do. Cash is critical to my or any business enterprise, so I reconcile my bank account on the day I receive the bank statement. Using QuickBooks I can reconcile my bank account in less than five minutes. I normally just check off the items recorded on my bank statement, and if the account reconciles, which it usually does, I am done. This month I took the additional step of briefly looking at each of the checks that was returned with the bank statement.
One check caught my eye—it was on blue paper rather than the green paper of my business checks. Initially I thought it was one of the new replacement checks that are now being processed electronically. It was check number 11111 for $4,200. I reviewed my check register, and check number 11111 was written for $4,200 in payment of a bill. The blue check that was returned with my bank statement, however, was payable to an individual and cashed by a bank in New Jersey. Upon closer examination, I noted that my logo and the bank’s logo had been recreated for the check and that my signature had been forged.
My bill payment check was stolen, either from the mailbox in Seattle, the mailroom of the company to whom the check was sent, or somewhere in the mail system. Someone spent considerable time to recreate a business check that looked like mine, with the check number and amount the same as the stolen check.
My bank reimbursed me for the amount of the check, and ultimately the bank in New Jersey will absorb the loss. But had I not reviewed the checks that were returned with my bank statement, I would not have known of the fraud until I received a late notice for not paying my $4,200 bill, and the probability of catching the person who committed the fraud would be more remote.
For me the lesson is, and my advice to you is:
Reconcile bank accounts immediately upon receiving the bank statement.
Have the cancelled checks returned with the statement, even if it costs more.
Review the cancelled checks, even if the bank account reconciles.
It happened to me—and it can happen to you. Be aware and be careful.