Bookkeeper goes to jail for eight years after defrauding employer

March 18, 2011 Christina Catenacci Employee Relations, Human Resources

The British Columbia Court of Appeal recently upheld a lengthy prison sentence for a bookkeeper who defrauded her employer of over $700,000.

What struck me was that this fraud went on for four years. During that time, the elderly owners of the business blindly trusted this bookkeeper to take care of the accounting of the company. The couple’s children similarly were involved with the daily bookkeeping, only getting involved once the fraud was discovered and they realized that as shareholders, they could be in trouble with the Canada Revenue Agency (CRA) for tax liabilities.

More specifically, for four of those years, the bookkeeper defrauded the family-owned business of $712,282.78, using many schemes, including:

• The unauthorized issuance of company cheques
• The unauthorized use of shareholder credit card accounts
• The use of a credit card in the name of one of the shareholders
• The diversion of cash payments
• The use of her landlord’s credit card which she repaid with fraudulently issued company cheques

It’s interesting that the elderly couple and the children all blindly trusted this bookkeeper for years. It was not until the fraud was discovered and the children realized that they could be in trouble for tax liabilities that they decided to take a closer look.

I’m no accountant, and I delegate taxes to someone with training in accounting, but I think that, for businesses, playing an active role by keeping an eye on things and regularly asking questions is essential and can go a long way in preventing this type of recurrent fraud.

Accounting may seem like a foreign language, but it is imperative that organizations take an active role in accounting procedures. Fraud is far too common, and apparently too difficult to notice, for organizations to avoid understanding at least the basics of accounting principles. And this is your money we’re talking about, the profits that you and your employees work so hard to earn. At the very least, an executive should check the figures that the bookkeeper reports. This and other controls should be set out clearly in accounting policies and procedures.

Unfortunately, this company appears to have had no such controls in place. The shareholders abdicated their responsibility for accounting, and effectively allowed the bookkeeper to take advantage of the company for several years.

What do you think?

Christina Catenacci
First Reference Human Resources and Compliance Editor

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Christina Catenacci

Christina Catenacci, BA, LLB, LLM, was called to the Ontario Bar in 2002 and has since been a member of the Ontario Bar Association. Christina worked as an editor with First Reference between February 2005 and August 2015, working on publications including The Human Resources Advisor (Ontario, Western and Atlantic editions), HRinfodesk discussing topics in Labour and Employment Law. Christina has decided to pursue a PhD at the University of Western Ontario beginning in the fall of 2015. Read more

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accounting, accounting policies, accounting procedures, bookkeeper, bookkeeping, Canada Revenue Agency, CRA, employment law, finance, fraud, fraud prevention, shareholder liability, tax liabilities, theft

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