The Devil is in the Details
Posted by Karen in Musings on October 8, 2011 | no comments
I recently consulted with a client who was going through an audit with an outside agency. During this process, the client discovered that the staff person who had been hired into the controller position some months ago actually had little or no knowledge of detailed bookkeeping/accounting processes. When he was hired, the books were clean, and all daily/weekly/monthly procedures were fully documented in exact detail. He was the happy recipient of all these good things. There are many companies do not have clean books and well-documented procedures, so these were truly gifts.
Now, those of us who have worked in accounting know how quickly the books can become unbalanced when good procedures are not followed, and when information is not examined and verified. It seems as though the new hire got in over his head and decided to fake it. He didn’t follow the procedures, and he made up journal entries to force balances to the detail reports. That went on until the audit. Then all was revealed.
The best advice I can offer to owners or executives who are responsible for the bottom line is do your own auditing. Take those big-picture top-level reports and drill down into the details. You may or may not find the devil hiding somewhere, but you won’t know unless you look. The truth, be it good or bad, is in the details. Be vigilant!