Could Your Clients Afford a
$100K Hit to Cash?
Could Your Clients Afford a $100K Hit to Cash?
A week ago, I was at a customer to enable them to close the second quarter of the year. They do the majority of their own
data entry and account reconciliations and I review the work and answer questions. The proprietor had an inquiry concerning
how to enter a May transaction and thus had not reconciled the June business reviewing account statements. In anticipation
of our meeting, she began assembling all the bank statements and saw something peculiar: day by day installments in June to
a Capital One card. The issue is this organization didn’t have a Capital One account! The fraud totaled more than $100,000
stolen from their business checking account for more than 35 days. Nobody saw, on the grounds that neither one of the
owners looks at the online banking all the time. Besides, this is a QuickBooks Desktop file, so there was no day by day bank
feed to audit. Obviously, the fraud was accounted for immediately, however, who realizes to what extent it will take before the
bank restores the funds to their account. It raises the question: Can any of your customers bear to take a $100K hit to cash
on hand? What could this business have done to get the fraudulent activity in an all the timelier way? The appropriate
response is: perform a week by week, interim bank rec!
What is an Interim Bank Reconciliation?
Bank reconciliations are a key accounting function. I’ve had customers get some information about the significance of
statement reconciliation. A week ago, while meeting a potential customer, the entrepreneur told me, “I post all my own
transactions, however, I don’t have to do a bank rec and I would prefer not to pay another person to do it either.”
This is misguided reasoning. Reconciling your checking, investment funds, credit card and loan/LOC accounts is the best way
to guarantee that every one of the transactions on the statements is in your books too. You may answer, “Well I use QBO (or