Employee Fraud – Bookkeeping Irregularities
Prior to their retirement, a long-time and trusted employee of a profitable Canadian company was asked to train their replacement, who began to note financial irregularities in the company’s bookkeeping. The new bookkeeper brought their concerns to the owner, who then asked that they reach out to the now-retired employee. The company’s suspicions were further aroused when the retired employee sent back a note with a cheque for over $50,000 to the new bookkeeper. That is when Williams Meaden & Moore was called in.
Through our analysis of the company’s internal controls and discussions with management, it was alleged that that the employee in question had destroyed all bookkeeping work while the owner was out of the country, including the preparation of cheques, co-signed cheques, deposits, and invoice payment. Our analysis identified that, over a span of 4 years, the employee had embezzled over $450,000 to pay personal credit card bills and municipal taxes, as well as more than $250,000 for other consumable items. We were unable to find records dating further back, as they had disappeared from the owner’s home, which the employee also had access to.
Our analysis was presented in criminal court and the employee was found guilty and required to pay restitution. Council for the victim was also able to obtain civil judgements, including costs. In addition, our further reporting supported that the employee was insolvent at the time of transferring funds into an insurance-based RRSP. The court then ordered these funds to be paid to the victim.