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I won’t bore you with all the stats but the fact is that Small & Medium sized companies are as vulnerable to fraud as any other companies.

Business owners must demonstrate that they are watching the money (their money) even if it might appear they are greedy! So here are a number of recommended do’s and don’ts if you are a small business owner:

  • Don’t leave cash or checks lying around. All monies (except for small amounts for drawers & petty cash) should be deposited daily.  Be aware of what’s on that deposit slip whether or not it is hand written or system generated.  All employees should see that you and they must respect the inflow of cash and exercise stewardship over it.
  • Don’t allow easy access to company credit cards, personal credit cards (yours), gas cards, warehouse clubs, etc.
  • Don’t SHARE PASSWORDS. Always have your own password to your accounts. 
  • Do Require a daily report of deposits and how they were entered into the system (build an Excel report if necessary):
    • Payments on account
    • Vendor refunds
    • Prepayments
    • Cash Sales
  • Do have online access to your Bank. Log on daily and review your balances.  Mark the 1st day of every month to look at your checking account on line and view all the checks that were written.  If you don’t have time for this (and you should make time) DO NOT delegate this to the bookkeeper(s).  Delegate to another individual you trust.
    • Is that your signature (or an authorized signer)?
    • Who is the payee? Do you recognize them?
    • Does the ending balance make sense to you?
    • Be sure to review ALL ACH and Wire Transfer activity
  • Do require monthly Bank Reconciliations that you must sign off on or initial.
  • Do restrict who can set up new vendors and new employees in the system. These are really ‘soft’ spots where businesses become vulnerable to fraud
  • Do review your Payroll reports:
    • Do you recognize the employee names?
    • Do the hours worked look reasonable?
    • Is your payroll becoming bloated?
    • Be sure payroll taxes are being paid and other employee elected withholding is ending up where it belongs:
      • 401K contributions
      • 401K matches
      • Life Insurance premiums
      • Extra withholding
      • Other miscellaneous deductions
    • Don’t ever hire someone in a cash management position (your bookkeeper, cashiers, etc.) without doing a background check. It will be money well spent and there are a number of on-line companies that can provide this service at reasonable rate.

The incidence of bookkeeper fraud is wide-spread and the amounts they are able to steal are considerable.  But bookkeepers are certainly not the only employees to be wary of.  Remember, whatever you may have heard about Internal Controls to protect your assets, TRUST is not an internal control.  Finally, take advantage of your accounting firm to help you maintain the required oversight to prevent losses from theft.  It will be well worth it.


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I know that I’ve neglected my own website while on a very lengthy project that took me away from home several days a week for over a year.  But now I am back.  And I am committed to doing a better job maintaining this site and hopefully hearing from like minded Controllers and Accounting Managers.  I promise.  I’d love to hear from my followers and to gain some new ones as well.

I’m getting ready to post an article I wrote about inventory worst practices.  If inventory is under your wings, I think there are some eye opening comments.

I SEE DEAD PEOPLE….. and your business ‘sixth sense’!


sixth sense


It has been a few years since the movie the ‘Sixth Sense’ hit theatres.  It was a great movie and showcased Bruce Willis in a way we rarely see him.  It’s about a little boy who has the ability to see dead people.  His mother, obviously concerned about him, takes him to Bruce Willis, a therapist.  See the movie.  And don’t let anyone reveal the shocking end until you’ve seen it.

But what has the movie and the title of this post have to do with you as a controller?  This is a theme I’ve touched on in earlier posts and I will come back to often.  You could be the smartest accountant out there.  Maybe you passed the C.P.A. exam on the first pass.  (I didn’t).  But none of that is going to make you good at your job if you do not have people skills.  Sales Managers are usually promoted because they were great sales people.  Does this mean they know how to manage people?  Very often, that is not the case.  And accountants, just the same, who excel in accounting are promoted to Controller and Assistant Controller positions.  They foolishly believe that their new position  is just about accounting.

As a Controller, just as a Sales Manager, getting promoted doesn’t necessarily mean you have the people skills set necessary to achieve your company’s objectives.  It takes a sixth sense to know if there is trouble brewing on your accounting and finance team.  Even if you spend long hours at the office (that’s a post for another day) if you lock yourself up in your office,  you end up smothering out the small flame of information that might reach you in time to do something about it.  CASE IN POINT…..

  • We had a great clerical/administrative employee.  She was always on time, did her job well, and didn’t involve herself in the daily office drama.  I learned that she was unhappy and was interviewing for another job.  I knew that she seemed unhappy and I asked someone on our staff that was close to her if there was a problem.  I set up a meeting with the employee.  Her unhappiness was caused by a few things that were easily fixable.  When I left the company, she was still there.

More importantly, a sixth sense is really the ability to see things others don’t.  Are you good at getting to the root cause of a problem.  Can you problem solve at all?  Have you noticed how long it takes to mail out end of month statements?  Maybe it is taking two people to fold and stamp them.  Is there a better way?  How many customers would prefer to receive an e-statement?  Did you know there are companies out there that you can outsource this to?  What if someone says in a meeting how long it is taking him to calculate all the finance charges?  That should raise a HUGE red flag.

How else can I define ‘sixth sense’?  We can call it other things……………perceptive? extra sensory perception (esp), intuitive?  And if you have none of these abilities…………….ask yourself this?

  • Am I on the ‘grapevine’ (do colleagues and staff members confide in you?)
  • Do I know the names of my employees’ spouses and children?
  • Am I interested at all in making my staff’s and other employees jobs easier? More productive? More efficient? (You recently told someone that six year old p.c. should be just fine and they will have to put up with how slow it is – you get an ‘F’)
  • You are a micro-manager which means you don’t trust the employee to do the job right.
  • Is your way the only way because you are the boss?
  • Do you refuse to share information with your employees that would give them a better understanding of what is going on in the company?  Information that is not confidential………….information that other managers may be sharing with their staff?

If any of these describe any of your behaviors as a Controller, I urge you to see yourself as a resource person, not the Commanding General.  Those ‘Commanding Generals’ cost companies a lot of good employees.  You know, the really smart and independent thinking staff members.  They will move on just as soon as they can rather than stay and squander better opportunities working for better people.





The story is true.  Some of the facts have been changed to protect identities.

A Controller friend of mine, I’ll call her ‘Janice’  had landed a good job about eighteen months ago.  She was hired to work for a sizable family owned operation that decided they needed to have on site accounting expertise.  However, six months in, the family sold their operation to a very large corporate entity.  The larger company wanted to continue to run the company as a separate entity with very little visible change.  At the same time, the new owners wanted to implement a more sophisticated software system.  In addition, they wanted to collect much more data about the operation than the previous operators had or were even interested in.  At the time she went to work, she was approaching her sixtieth birthday.  But retirement was not on her horizon at all.  She enjoyed working and finances were an issue too.

The first problem to arise was that the new owners had very high expectations for the controller.  The management group was young and energetic.  They worked long hours.  Many of them were Ivy League college graduates with extensive training in data analytics and financial analysis.  The difference between the Controller and top management, including their CFO was striking and apparent to all.  Over time the financial statements became less reliable while management demanded explanations for every general ledger account.  And, over time the relationship between the Controller and management deteriorated until finally one day it all came to a sad end and the controller ‘Janice’ lost her job.

Part of the problem was that the Controller, up to taking the new job, had never worked on the management side of the business.  She had always specialized in tax at a public accounting firm.  She had plodded away there year after year, enduring the long hours of tax season.  She was ready to ‘break out’ and move into an accounting manager position.

The family business was thrilled to hire her believing that since she had spent her life in a public accounting firm (in fact the firm preparing tax returns for the business) she would be more than competent to step into the controller position.

If you look at the fact pattern one might draw the conclusion that our controller was just in the wrong place at the wrong time.  As controllers, we need to understand that our working environment is ‘subject to change without notice’.   Sometimes going to work for a small company can turn into working for a very large company.  Generally, the larger the company, the higher the level of professionalism that is required.  What happened to Janice is not necessarily a predictable outcome.  Perhaps if her employer had not been acquired, she would have had the time she needed to get up to speed.  And then, maybe not.

So, what is the point of all this?  I doubt that Janice could have done anything to have prevented the inevitable outcome other than never having changed jobs.  But we all are entitled to take chances, to get out there and see what else we can do.  However, I must return to the theme of some of my earlier postings.  Never stop learning.  Spend part of every day honing your skills whether it’s getting better at Excel or reading a current article in your field.  And, if you are looking ahead thinking that things will always be the same………….I don’t this that has happened since 1990!







Last week in my column regarding ‘Fear of Failure’ I promised to write about fear of change.  If you have the ‘fear of change phobia’ and you are living on Planet Earth you are facing a very hard road ahead in your professional life.

Several years ago, during a merger of two very large companies, I ran into this first hand.  I worked for the company being acquired.  Top management really wanted to see the management of the acquired company prevail (and it did).   But the controller of the acquiring company was vehemently opposed to this and in numerous ways attempted to thwart the consolidation of the two separate systems.  It was not an act of direct intent but his inability to accept the fact that his world was going to change in a big way and he may or may not survive that change.  Granted, he was close to retirement age but he was intelligent and, more importantly, had a major role, if he wanted it, in creating a new company emerging from the consolidation of two companies.  Instead, he dug his heels in and eventually paid the ultimate price which was the loss of his job.  How sad that after a career of years with the same company that it ended that way.  The company survived and moved on.  But it had to be painful for him.

It does not matter your age, or whether you are male or female.  It does not matter if you’ve been there thirty years or you personally oversaw the design of the current systems, practices and procedures.  In business, as in life, nothing ever stays the same.  I have always told people that I tried to calm myself during some particular storm or other by telling myself that in business, it is not life or death.  But, in life it can be.

What are some of the ‘common denonimnators’ in business people who are opposed to change, especially CFO’s and Controllers:

  • Number One Reason:  They are not interested in learning anything new.  In other words, they do not keep up on changes in their industry and/or profession.  They avoid attending webinars, seminars, etc. and perceive them as a waste of time.  The last time they bought a book about their profession was when they paid for a college textbook.
  • Number Two Reason: They are not interested in acquiring new skills.  If you find a CFO or Controller who cannot use Excel to some extent or never heard of Power Point they are probably change averse. (Do not assume all of them are ‘old people’) There are a lot of younger employees you would expect to be proficient who are not.
  • Number Three Reason:  They do not enjoy collaborating with staff or colleagues.  They view all meetings as a waste of time and see no reason to communicate or share their thinking.  Controllers and CFO’s who exhibit these characteristics are generally very rigid in their thinking and are not at all open to proposals for changing anything.
  • Number Four Reason:  I find this to be a painful one and that is insecurity or low self-esteem.  I have run into this in my career.  Someone who is constantly afraid of losing their job will not be able to even deal with change.  They are too busy keeping a stranglehold on the status quo.  The concept of ‘the Gold Watch after fifty years’ is dead and gone and is not coming back.  If this describes you, it is unlikely you will ever become an agent of change.
  • Number Five Reason:  They are not strategic thinkers.  Unless you can look ahead, whether it’s for your Finance Department or your company, if you cannot formulate a strategy to achieve growth  in your sphere of influence once again you cannot be an agent of and for change.

If you find yourself guilty on any of the above counts, where do you begin to change yourself…… to leave behind the mindset and habits that will eventually hold you back?  I firmly believe it is in the classroom wherever that might be.  Pay attention to your surroundings at work.  Search the internet for trend analysis related to your industry or profession.  Take some online courses.  Buy a book.  Have an ‘out of body experience’ and pretend that you are a consultant newly hired to help streamline your company (see my earlier columns on this).  Make a list of what you see.  Oh, and by the way, if your company has already hired consultants to streamline your business, get involved.  And even, perhaps, be concerned.

Have a productive Work Week!

Judith D. Sherling, CPA, CGMA




Following up on the last few posts on Month-End closing it’s time to get your arms around the entire closing process.  I believe in this case we need to start at the end and not the beginning.

Below are my recommendations:

  1. Create an Agenda for your ‘Post Closing Meeting‘.  Personally, I think there should be a staff meeting every month right after closing that addresses all issues that arose during the process.  As the closing process improves, the meetings will become less time consuming.
  2. Gather all staff involved in the closing process within one to two days after the closing is totally complete.  Have them bring all checklists and instructions as well as other notes that they think is relevant.
  3. Ask each staff member to be ready to ‘report’ any findings (good or bad) that may have affected the close process.  I recommend letting staff members speak first in a ’round table’ session.
  4. If you can, use a flip chart/board to list the issues that arise.
  5. When issues are identified, you may need to handle them or assign them to someone to investigate.
  7. Morning meeting – bring doughnuts.  Afternoon meeting – bring cookies.

For example, during the ‘Post Mortem’ you discover that your Accounts Payable department continued processing expenses into the system for the current month after the month end cutoff but before you actually closed the books.  In other words, somebody will most likely need to accrue into the next month these expenses or, if still possible, reverse and have rekeyed in the new month.

The question becomes for your post-mortem …… why did this happen?  Was A/P not informed of the impending cut-off?  Errors are time consuming.  So how can you drive out such time wasters?

What if a key staffer was out sick, or otherwise absent during the process?  Did everything come to a screeching halt?  Is anyone cross trained to perform those duties?  If not, there’s a problem sitting squarely in your lap.

Let me point out that ‘post-mortems’ should always be a learning experience and not just for your staff……for you as well.

As a controller, most of your life is spent being reactive.  If you don’t believe that, make a list tonight of all the things you want to accomplish tomorrow.  Put it on a time sheet.  For instance, 8:00 a.m. – finish Segment X G/L account review – 9:00 a.m. – Read lease for new copier – 10:00 a.m. – call a Vendor about a problem……………….then, I challenge you to get all of these things done, in that order and on time.  I’m going to gamble and say you won’t.  The truth is ‘the day owns you’ and not ‘you own the day’.  Agree?  I believe that my ‘post-mortem meetings’ are not reactive.  They are proactive if you follow through to see if needed improvements are made before the next month end close.  Try it.  Let me know how it goes.

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