Trust your friend, but choose your employees properly. How we helped to identify the embezzlement at the company by chief accountant

In December 2022, the client enlisted the services of a Chief Accountant based on a friend's recommendation, who is an entrepreneur. They prepared a contract of employment, but the chief accountant inexplicably resisted the inclusion of a clause regarding full responsibility in the agreement. 

The responsibilities of the Chief Accountant involve transferring funds from the client's accounts to other parties and carrying out self-collection procedures. The chief accountant persuaded the director to obtain access codes for the company's personal account by using the phone number that is registered for her. Later on, an employee from the accounting department approached the director. He received messages and made screenshots of them from instant messaging apps. These messages revealed that the chief accountant was suggesting stealing money from the company, including through the distribution of bonuses to employees. 

The client approached us seeking assistance in confirming the details regarding the fraudulent activities of the Chief Accountant, as reported by an employee of the company. 

In order to investigate the actions of the individual following the director, we conducted the following procedures:

• We requested the company's bank account statements that show the movement of funds in the company's settlement accounts while the chief accountant was working.
• By the director's order, a commission to carry out an inventory was formed. An independent auditor was also included in the commission.
• We established a specific date for conducting an inventory of the company's settlement account in order to transfer funds to counterparties and pay employees' wages.
• The notice of the inventory was given to the chief accountant, stating that she should provide receipts prior to the inventory. Also, all expenditure and receipt documents for the property should be given to the accounting department or transferred to the commission before the inventory began. Additionally, any valuables under their responsibility were accounted for and expenses were recorded.

The audit uncovered a shortage in the company's settlement accounts and the discovery of forged self-collection receipts. The chief accountant was found to have embezzled 700,000 rubles from the company over a period of six months. Furthermore, it was discovered that she had falsified employment documents and increased her salary, effectively terminating her own employment retroactively. However, she did not have enough time to inform the Pension Fund about the corrected information regarding wages and termination. The chief accountant has been asked to provide explanations regarding these findings. 

When the issue of work suspension and reporting the theft of funds to law enforcement agencies came up, the chief accountant admitted her wrongdoing and returned the money to the company. She also voluntarily wrote a resignation letter. The director chose not to press charges or terminate the employment contract, instead opting to dismiss the chief accountant willingly. This situation could have had a more tragic outcome with a criminal case and court judgment, but the employer's decision saved the employee.

Is it possible that the conflict with the chief accountant could have been prevented?

The chief accountant is a key person in the organization, because have complete access to all the financial transactions of the company. Typically, the management transfers personnel records to the accounting department for safekeeping, and also delegates the responsibility of holding the director's electronic signatures and the company seal to the chief accountant. However, not all employees can be trusted to act responsibly in this role. 

A well-written employment contract with the chief accountant ensures that they will fulfill their job responsibilities diligently. It is important to include a clause in the contract that holds the employee fully accountable. Without such a clause, the chief accountant will only be liable up to the amount of their average wages. In certain situations outlined in the law, the head accountant assumes complete financial liability. This can occur, for instance, when a court ruling determines the extent of damages resulting from criminal actions. The procedure is often lengthy and challenging. Regularly, take inventory of the company's active accounts, and employment agreements with staff store with the director rather than the accounting department. Additionally, physical assets, such as the company's tangible assets and the director's electronic digital signature, should be transferred to responsible individuals according to the act of reception and transmission.