10 ways employees abuse their official position and methods of dealing with them using the accounting system

    Not so long ago, one of the projects during the inventory revealed a very large shortage. As a result, one of the most important requirements of the client for the project was: to understand what was going on in the system and bring the rest, as he put it, “to an adequate state”.

    And shortly before that, in my practice there was a case when, on the second day after the introduction of a high-quality cash flow accounting system (cash desk), a shortage was also detected, but already at the cash desk.

    In both the first and second cases, representatives of the customer tried to blame the problem for the people who were involved in the implementation of the new system. And only after a long and, I must admit, rather unpleasant and very emotional proceedings, was it possible to prove to the client that the system was working correctly, and that the company's employees who intentionally or unintentionally created an actual shortage of goods and money were to blame.

    Similar situations in my practice are far from singular. In the small and medium business with which I work, accounting difficulties and abuses associated with the lack of a full accounting system are a very common problem. That’s why I am forced to explain to the customers the same things from time to time, commonplace for me, but, as it turned out, not for customers.

    This article is intended to systematize my experience in detecting abuses, and to reveal typical cases that I encounter very often. I hope that it will help management and business owners to avoid mistakes and unpleasant situations. And, of course, I really hope that after writing this article I will be much less likely to have to explain the basic concepts and typical patterns of abuse to my future customers.

    Important: in this article I write about the methods that unscrupulous employees use. I understand that most of the employees in any company are honest and decent people who will never allow themselves to behave incorrectly and deceive the employer. But, as they say, the family has its black sheep, and I just want to talk about such situations. Moreover, they meet, sadly, much more often than we all would like to.

    Below I will give the 10 most common methods of abuse of office by employees, as well as methods of dealing with them. But first you need to understand: why is such a situation even possible?

    Causes of abuse: how is this possible?


    The fact is that representatives of modern small and medium-sized businesses (and often large ones) are very poorly versed in accounting systems. The reason here lies in the fact that in our country, business in the “fat years” grew very quickly, and managers began working with the simplest systems, and by the time they needed a more or less serious accounting system, they already had hired personnel.

    As a result, employees are involved in the implementation and constant work with the accounting system, and the manager does not find time to personally delve into all the nuances, and he also almost does not work with the new system. As a result, the company's management is very poorly versed in the accounting system that is used in their own company. It is clear that employees with certain knowledge see the opportunity to take advantage of this ignorance in their favor.

    In the past “fat” years, most of these abuses went unnoticed, because against the background of high profits it could simply not be noticed. But in recent years, amid the crisis and recession in the economy, business owners and managers have begun to take into account even small amounts of losses and pay attention to them.

    Why are such abuses even possible? The main reason is the lack of necessary knowledge of the management, and the presence of deep knowledge of the accounting system for employees who work with it. It is clear that a person in the process of working with any system gradually studies it, sees all the "inputs and outputs", notices various "holes" and shortcomings. And there is a temptation to use this knowledge to your advantage.

    Moreover, very often company employees deliberately mislead management about their level of knowledge of the system. They also tried to deceive me when I acted as an invited business consultant and studied the current work of the company. In some cases, I even started to teach people who knew her very well to work in the system.

    As I found out that I and the company management were misleading, the question is separate. Here I want to consider the reasons why people did this. And they come down to different types of abuses that employees tried to hide with the help of apparent ignorance. Let's look at the most common ones.

    1. The actual provision of one service and the conduct of another


    This type of abuse is usually present in the service sector. For example, I observed such actions in a massage parlor, where the master really provided a service to a client worth 1000 rubles and received exactly that amount in cash. And another service was introduced into the system, the cost of which was only 300 rubles. And a small amount was also sent to the cash desk of the company.

    Such abuse almost always involves collusion with the administrator, i.e. with a person who provides services in the system, and also monitors the work of the salon or sales department. In another case, such abuses are extremely risky, and therefore perhaps only in isolated cases.

    How to deal with this:

    1. Customer personification and bonus points. If each of your clients is registered in the system, and after the service is provided, bonus points will be awarded to him, then the customers themselves who are interested in the correct calculation of bonuses will become a factor in protecting against employee abuse.
    2. Employee motivation. A well-thought-out system of payment and motivation also reduces the number of possible abuses.
    3. Strict accounting of sales with personification by employees and a competent reporting system. In this case, the manager will always be able to analyze what services each of the employees provides, what types of services are sold in each case. Such reporting clearly shows which of the employees works worse than others, sells more cheap services, etc. It also helps to notice sharp changes in the work of employees or discrepancies in the services sold to the big picture.

    Understanding that management can analyze such indicators at any time, and that employees with low sales rates can be punished financially and even dismiss, also significantly reduces the desire to engage in this type of abuse.

    2. The service (sale) is not carried out through the system at all


    In this case, the client receives the goods or service, pays for it in full, but does not receive the check and the sale itself is not conducted at all through the accounting system. Buyers may or may not know this, it depends on many factors.

    In the case of the sale of unaccounted for services, the problem lies in lost profits, and in the sale of goods that were not carried out at all, shortages arise in the warehouse, which subsequently also almost always “jam”. They are written off for re-grading or hidden in a common inventory document among other goods, which for various reasons also ended up in the “shortage” column. Therefore, it is almost impossible to subsequently identify such a sale.

    How to deal with this:

    1. As in the previous case, the personification of customers and the bonus system work well. Make buyers interested in registering their purchases correctly, and they will control the sales process themselves.
    2. Monitoring the work of employees. It is necessary to take into account in the system incoming, outgoing calls, correspondence with clients via the Internet, any customer requests.

    To implement the above solutions, a high-quality customer service system (CRM) is suitable, and for buyers you need to create a separate service where they can see their purchases and accrued bonuses. For example, the SMS notification system works very well, when after each purchase a person receives a notification “Thank you for the purchase, you have been awarded a bonus of ...” or any other similar methods.

    3. The manager sells the goods (service) with one discount, and conducts - with another


    It is very important to understand that your customers are interested in their profit, not your profit. Moreover, in most cases, the goods are not returned, and therefore buyers do not really need any guarantee documents and checks or other documentary evidence of the purchase. Especially often this scheme works in small companies that are registered as individual entrepreneurs, and, accordingly, they do not need checks for accounting and tax reporting.

    How does this happen? Customers very easily conspire with the seller to get the goods at the best price. As a result, the manager conducts the goods "for himself", i.e. with the highest possible discount for employees. Or else he somehow draws up a sale at a discount, for example, creates a card of a fictitious wholesale buyer, on which he draws up the goods, while the actual sale went to several retail customers.

    At the same time, buyers receive from the manager some discount, for example, 5%, and pay for purchases in cash. And the manager draws up the goods with a 15-20% discount, transfers the funds through the cash register, and takes the difference for himself.
    Another option is to sell the goods at all without a discount, and checkout on a customer’s card, which has a good discount in the system. Of course, when reconciling with the client, these sales can be detected, but if all the work with the client, including reconciliation of debts, is carried out by the same manager as executing the fictitious sale, then with this scheme it remains unpunished.

    How to deal with this?

    Only high-quality and constant control of the client base will help here. When identifying an unfamiliar large customer who pays in cash, the head of the sales department should be interested in what kind of client it is and how to contact him. Also, questions should arise if the manager draws up a large amount of goods.

    Any tricks of managers in such cases are revealed only with the help of strict sales control. High-quality work with the customer base is a method that will help both to avoid cheating on the part of employees and to improve the quality of work with customers.

    4. Fraud with the exchange rate


    This method is very common in companies where prices are linked to the dollar, euro or any other foreign currency. Its essence lies in the fact that at the time of the transaction the exchange rate was one, and they conduct this transaction at a different rate, more favorable for the buyer.
    For example, a company sells goods at a price of 1 cu What's next:

    1. The customer buys, say, 20 units of such a product.
    2. At the rate of 1 euro = 70 rubles, the amount is 1400 rubles. That is what the buyer pays in cash.
    3. The manager sells at the rate of 1 euro = 67 rubles.
    4. As a result, the purchase price is 1340 rubles, and the difference (60 rubles) is in the seller’s pocket.
    5. The course in the system changes back. But the invoice has already been posted, the amount does not change.

    Typically, such fraud is practiced when selling large quantities of goods or at a high price in arbitrary units. In some cases, a conspiracy with a client is also quite possible, then the price difference is divided between the manager and the buyer (the latter receives a discount in rubles, i.e. selling at the rate is more profitable than it is real on the day of purchase).

    How to deal with this?

    General recommendations - this is a competent delineation of access to the system. An employee with seller rights should not have access to a change of course in principle. Unfortunately, in small and medium-sized businesses very often they do not pay enough attention to delimiting the access rights of employees to the system or the seller concurrently also deals with other issues, including the timely change of the exchange rate.

    In the latter case, one has to look for non-trivial solutions. For example, one of my clients has re-engineered such a scheme: with every change in the internal exchange rate in the system, a notification is sent to his email. In his case, such a method proved to be the most effective.

    5. Backdating


    In this case, the seller creates the correct document, conducts the sale according to all the rules, and then marks the document for deletion. At the same time, the seller receives the whole amount in cash, it is completely in his pocket, and in the system the sale is “not held”.

    In this case, the manager usually works in conjunction with the storekeeper, the amount from the sale is divided between them, and then, during the inventory, the shortage is hidden in one way or another. In case of insufficient accounting for the warehouse, the storekeeper refers to the reassortment. And if this is not possible, then the amount is replenished at the next purchase, i.e. the company eventually receives the goods or, in case of compensation for shortages from the salary of the storekeeper, the cost of production, the storekeeper compensates for the damage from the amount of the canceled invoice. And the profit from the sale of these goods, which the company should have received, is instead divided between the manager and the storekeeper.

    Also often retroactively adjust the amount of discounts or transfer the expense document from one date to another in order to get a sale at a favorable rate or the consumption of goods at prices before revaluation (increase). Here the manager usually works in the place of the cashier, since the payment must also be changed, and money can only be received in cash from the “plus” at the cash desk, which is formed in this case.

    How to deal with this?

    • The most effective method is to prohibit retroactively working with documents at the level of employee access rights.
    • In cases where a ban on working with the posted documents for one reason or another is not possible, you can also configure the manager to notify of any editing or mark to delete documents retroactively.

    Thus, each invoice canceled after the conduct must be justified. If managers are aware of this, and the manager is not too lazy to delve into the reasons for corrections in a particular document, then the problem is also quite successfully solved.

    6. Before the inventory is taken, the goods are sold without documents or stolen, and shortages are written off for confusion.


    This usually happens before the first inventory in the company or when introducing a new accounting system. There have been cases when people quit before the inventory itself, which revealed a significant shortage.

    How to deal with this?

    The only effective method is to install video surveillance. It is practically impossible to programmatically control such actions, since such thefts usually occur before the inventory, which is carried out in order to restore order and create a modern accounting system.

    Selective calculation of real goods in a warehouse also gives a certain effect. For example, you can select a group of goods and count them 2-3 days before the inventory. Next, check the movement of these products in sales. If, during the inventory, the quantity did not coincide with the previously recounted (taking into account the sold items), then it was possible to identify theft.

    On the other hand, you can be sure that after the introduction of a high-quality system of accounting for goods and sales, such theft will be minimal or stop altogether. With each subsequent inventory, it will be possible to visually see if there is a re-grading. And for groups of goods, where the shortage is significant, you can always view the detailed movement (sales, write-offs, transfers, etc.), identify the reason and take appropriate measures.

    7. Payment of non-existent remuneration


    This type of abuse is practiced in cases where the company practices a particular referral system. For example, in my practice there was an organization that sells building materials. And there worked a system in which regular customers or partners in the referral program (designers, builders, repair crews, etc.) each time they bring in a client receive a certain percentage of the amount of the transaction. Similar reward options for attracting customers are practiced in other areas.

    What do sales managers do in this case? Some of the transactions that have nothing to do with referral partners are carried out as transactions involving a referral. As a result, the amount of remuneration is formed, which the manager takes for himself or shares with the referral on whose behalf these transactions are conducted.

    In some cases, which I observed in practice, the referral and the amount of payments were reflected in the expense invoice as a comment. Typically, accounting systems do not record changes in the comments, and therefore subsequently such notes were very easy to change or even delete. In other cases, fictitious “referrals” were added to the invoice at the time of sale, after which no edits were required.

    How to deal with this?

    Only a high-quality customer and sales accounting system can help here. It should be seen how this or that client appeared (calls and requests are recorded via the Internet), there should be the maximum possible personification of buyers, etc.

    8. Retroactive editing of cash documents
    In this case, the employee takes cash from the cash register, and then, in order to hide the shortage at the cash register, retroactively changes one of the cash documents. For example, marks a deletion receipt document that was posted 3-4 days ago. Or changes the amount in it by a smaller one. As a result, the remaining cash at the cash desk coincides with the balances that the cash report shows today.

    Let's look at an example of how this works:

    1. The balance in cash at the end of the day should be 35,000 rubles. Moreover, in the morning the balance was 15,000 rubles, and the cash flow from the sale of goods amounted to 20,000 rubles.
    2. Cash in the amount of 10,000 rubles is withdrawn from the cash register. It turns out a shortage. What does the cashier do?
    3. From incoming cash documents held 2-3 days ago, the amount of 10,000 rubles is deleted. This can be a mark on the deletion of the receipt of the document or a change in the amount (decrease) and retroactive review.
    4. Result: the balance in the morning is 10,000 rubles. No one has touched sales today, they are fully consistent with reality - 20,000 rubles. The balance in cash is 25,000 rubles. An employee withdrew 10,000 rubles from the cash desk for personal purposes, but everything works out according to the balances.
    5. How to deal with this?

    Here, the prohibition of retroactive adjustment of documents is also most effective. Or, if this is not possible for some reason, setting up management notifications in the event of any such adjustments.

    9. Outsourcing


    A very common abuse is when a reward manager passes orders to competitors. This is done either in plain text, i.e. the client is informed "we are not doing this, but there is such a company - here are her contacts - they will help you." Or the order is accepted, but all information, including the list of goods, prices, additional customer needs, his contact details, is quickly transferred to the competitor's sales department.

    How to deal with this?

    Only the introduction of a CRM system will help here, when all customer requests, all contacts, calls, etc. will be recorded. At the same time, it is very important that each employee knows that any contact with the client at any stage, including in case of refusal to cooperate, can be checked by the head. Monitoring the sales department is no less important than monitoring the accounting of goods or cash.

    10. Purchasing goods from a supplier at an inflated cost


    Probably everyone knows about this method of abuse. And the word "rollback" also sounded more than once in any company. In the event of this abuse, the employee responsible for the procurement of goods agrees to buy a particular assortment from the supplier at an inflated price, and the difference between the real value and the inflated supplier pays him in cash.

    Sellers often agree to fraud with “kickbacks”, since such a scheme ensures that the buyer will work with them for a long time and make purchases in large volumes. And it will remain loyal to the supplier even if competitors with interesting offers for the buyer company appear on the market. The benefits of the employee or group of employees responsible for procurement are obvious.

    How to deal with this?

    Here, downloading suppliers' prices, placing orders to suppliers through the accounting system and controlling the price difference between the price and incoming invoices when purchasing goods will help. In addition to software, sampling methods will also help.

    For example, a price request can be made by the head of the company, simply as an anonymous potential client. After that, the figures also need to be compared with those indicated in the prices introduced in the accounting system. It is especially important to check those product items for which the price for a standard margin for some reason is higher than that of competitors. It is also worthwhile to selectively monitor the prices of other potential suppliers of a group of goods selected for control.

    Let’s summarize: why have these troubles become possible?


    In fact, almost all abuses of employees become possible simply because the company for one reason or another does not have a strict automation system, there is no strict control, but there are some violations. The most common situations that contribute to employee abuse:

    • Insufficient cash discipline. Many companies try to save on taxes, and accept payment on bank cards of individuals (company management, employees), in cash without a cash receipt, etc. All these payments are potential fraud opportunities for employees, since they are not related to the client-bank or cash register, such sales are carried out with a minimum of documents, and such payment options are always entered manually into the system. Then these documents in the system are often corrected either because of abuses, or simply because of errors related to the human factor.
    • "Gray import." This is a situation where a company officially sells one brand, and customers are offered a choice: the original or “almost the same, but cheaper, even with the same barcode, but made in the Moscow Region”. As a result of such not entirely correct sales, employees also receive a “field for activity”, since the product has a different price, and it is almost impossible to distinguish it. Fortunately, I personally did not encounter such situations, but I heard about such working methods more than once and I understand that abuse is impossible to avoid here.
    • Excessive trust of business owners to employees. Moreover, very often these same people pay hired personnel a very small salary. You need to understand that each of the employees, even if he works for a long time and brings a lot of benefit to the company, is primarily interested in his own well-being, and only then is ready to work for your business. Therefore, increased trust is an unnecessary temptation.

    See how tough cash register discipline tellers have at banks. This whole set of rules and a strictly regulated list of actions are needed just so that people who work with money do not have the slightest opportunity to abuse their official position.

    It is also important to understand that with low salaries, the temptation to improve their financial situation is always higher than in the case of decent earnings. This is especially noticeable in companies where the amount of transactions concluded by the manager totals millions of rubles, and his salary is 30,000 rubles + small interest. In this case, the total amount on hand is, for example, about 45,000 rubles.

    I have seen this situation more than once, and I understand that with this approach, especially if the employee also sees the purchase prices and can calculate the profit from the transaction, thoughts that he is underpaid will certainly appear. And then it only depends on the person what he will do - quit or “correct injustice” through various abuses. The methods of dealing with such a situation, I think, are obvious: pay normal money and be sure to control the work of employees.

    In addition, it is important to understand: abuse is possible not only when paying in cash, but also in those companies that operate only by bank transfer. If necessary, the manager can conspire with one of the customers, and get an analogue of the “rollback”, but from the buyer. And if the amount is worth it, any employee can create a fictitious company or individual entrepreneur in the shortest possible time, as well as make non-cash payment through third parties by agreement. It all depends on the benefits: if the final figure is worth it, no difficulties for your employees will stop. Therefore, accounting and control are also important for companies that work only by bank transfer, as well as for everyone else.

    I hope that this article will help you avoid losses from employee abuse, as well as optimize the work of your company. At the same time, it is very important to create a well-thought-out system of control and accounting for goods, sales, cash flows, in which the manager will be able to access any information using convenient reports. And employees will know that they can be checked quickly and unexpectedly. No temptation is the best guarantee of honesty!

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