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You are here: Home / Employee Relations / Bookkeeper goes to jail for eight years after defrauding employer

By Christina Catenacci, BA, LLB, LLM, PhD | 2 Minutes Read March 18, 2011

Bookkeeper goes to jail for eight years after defrauding employer

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

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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, BA, LLB, LLM, PhD
Christina Catenacci, BA, LLB, LLM, PhD, is a member of the Law Society of Ontario. Christina worked as an editor with First Reference between 2005 and 2015 working on publications including The Human Resources Advisor (Ontario, Western and Atlantic editions), HRinfodesk, and First Reference Talks blog discussing topics in Canadian Labour and Employment Law. She continues to contribute to First Reference Talks as a regular guest blogger, where she writes on privacy and surveillance topics. Christina has also appeared in the Montreal AI Ethics Institute's AI Brief, International Association of Privacy Professionals’ Privacy Advisor, Tech Policy Press, and Slaw - Canada's online legal magazine.
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Article by Christina Catenacci, BA, LLB, LLM, PhD / Employee Relations / 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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About Christina Catenacci, BA, LLB, LLM, PhD

Christina Catenacci, BA, LLB, LLM, PhD, is a member of the Law Society of Ontario. Christina worked as an editor with First Reference between 2005 and 2015 working on publications including The Human Resources Advisor (Ontario, Western and Atlantic editions), HRinfodesk, and First Reference Talks blog discussing topics in Canadian Labour and Employment Law. She continues to contribute to First Reference Talks as a regular guest blogger, where she writes on privacy and surveillance topics. Christina has also appeared in the Montreal AI Ethics Institute's AI Brief, International Association of Privacy Professionals’ Privacy Advisor, Tech Policy Press, and Slaw - Canada's online legal magazine.

Reader Interactions

Comments

  1. Christina Catenacci says

    October 31, 2011 at 8:52 am

    That is a great point, Clyde. I think that this may be the way of the future for all businesses, including small to medium sized businesses.
    Christina

  2. Clyde MCDonald says

    October 30, 2011 at 8:37 pm

    For small firms, using a virtual bookkeeper can provide a real safeguard against fraud. If you cannot physically access the cheques, you cannot steal.

    I would also recommend hiring an independent bookkeeper to review your books, at least annually. This is not the same as hiring an accountant at year-end, as they normally just review the printouts. But rather, an examination of the actual data, to see if it has been manipulated.

  3. Christina says

    March 21, 2011 at 7:47 am

    Hi Dave,

    Thanks for your comment. That sounds like a really good idea to keep things under control financially. Too bad these measures were not taken in the case above…

    Christina

  4. Dave Quinn says

    March 18, 2011 at 4:04 pm

    There needs to be controls in place to monitor accounting practices. In my firm, each Friday I provide the owners of the company with a complete report of all financial transactions for the previous week. All checks and balances are verfied and signed off. In this way, they and I are in constant control of our financial affairs and should there be any descrepancies in any form, we are immediately aware, preventing errors and possible effors from manifesting themselves.

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