What’s Cooking?

Someone at the bakery had been cooking more than pastries.

The deeper they looked, the bigger the theft appeared to be.

I know, I know—it’s not going to happen to your firm.  Your firm is solid, and you trust everyone in it.

What could go wrong, anyway?

Cooking the Books

Not long ago, a famous Texas bakery found out the hard way.  This well-known bakery does a robust business, and enjoys a great reputation.  I would go so far as to say its name equates with sterling legacy and quality.

Imagine their shock (stupefaction is more like it) upon learning that their beloved, long-time CFO had embezzled a LOT of money.

I’m talking big boatloads.  (I’ll forego the obvious pun.)

And it had been going on for a VERY LONG TIME.

How was such a thing even possible?

It was possible because everyone else trusted that the money was in good hands.  Besides, they were busy with their own responsibilities.

And this is where we are ALL like the bakery.

Too Busy or Too Trusting?

We are all very busy.  We strive every day to make our firms successful– bring in the work, hire people to do the work, execute the work, send invoices for the work, and pay the bills.

But it all depends entirely on the money being safe.

A full annual audit by an independent accounting firm is the best way to make sure it is.

Unless you’re the sole owner of the business and the only one who touches the firm’s finances, you just need to do it.

The 5 Main Reasons to Get an Annual Audit

  1. It Can Prevent (or Stop) Disaster

As we’ve just seen, it can happen anywhere.  Seriously.  Even at your firm.  In ways you can’t even imagine.  Don’t wait to find out how creative someone can be.

  1. It’s Another Pair of Eyes

You can’t possibly watch everything, every day.  Nor can your partners and staff.  It just isn’t realistic.  Financial misdeeds can be so creative that, even if you were watching, you might not see them.  Cyber crime and identity theft have become pervasive.

  1. It Protects YOU Personally

If an independent accounting firm performs your audit, then you can sleep knowing that if anything fishy is going on, they will likely catch it.  And your partners will see that you mean business, and that the finances are being properly reviewed and reported.

  1. It Can Uncover Innocent Mistakes

An audit will uncover innocent bookkeeping mistakes.  We can’t all afford to have a CPA on staff, and accounting rules can be obtuse and ever-changing.  Uncovering errors prior to filing income taxes is priceless, and saves lots of brain damage later.

  1. It Tells Everyone Else That You’re Watching

If the watchdog sits next to the henhouse, the fox won’t be so tempted.  Everyone in the firm, and those depending on the firm, can rest assured that financial safeguards are in place.

Problems Do Not Improve With Age

If the bakery did perform audits, my guess is that they were not independent, outside audits.  It’s a family business, and as they said themselves, “based on trust.”

This trust cost them dearly.

When they eventually uncovered the scope of the problem, it was clear that nearly $17 million had been taken over a 14 year period.  Not looking too closely had been costing them over a million dollars a year!

Just Do It

You may already get an annual financial review by an outside firm, which is good.

A full audit is better.

Yes, it costs more, but you should think of it as a necessary cost of business, and cost-effective insurance.

There really isn’t a good argument for not doing it.

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