Troubleshooting Tool #8 - Enforce Annual Bookkeeper Vacation

When’s the last time your bookkeeper took a full week off? Has it been more than a year? Maybe longer? If so, you will want to consider enforcing an annual weeklong vacation and here is why. Depending on the state of your internal controls or lack thereof, an employee in the bookkeeping role who has not, does not and will not take a full week’s vacation (or two) on an annual basis is a red flag.


The eighth control in our series is Enforcing a One-Week Annual Vacation requirement.

Years ago I worked for an agriculture dealership in the back office. I met the accounting person from another dealership in the next town. She was well known in the region as a very capable person and a valuable resource. She knew what she was doing. And she was committed; never taking more than a couple days off at a time. The general manager and owner of the dealership trusted her completely. She was in the position a dozen years or more when it was discovered she had been embezzling from the company to the tune of six figures. How did she get caught? She fell ill for a week and was unable to maintain her scheme, resulting in a peculiar call from the bank to her boss that led to the discovery of the fraud.


It's important to note there were several internal controls completely absent in this scenario (as is usually the case). These missing controls could have prevented fraudulent behavior from occurring in the first place. Check here for previous posts in this series on these controls. Internal controls work best in tandem with others, radically reducing the risk of financial impropriety. But when it came down to it, being absent just one week brought the problem into the open.


The most common roadblock for small businesses owners when this control is brought up is “We don’t have someone to take the bookkeeper’s place for the week.” The best answer is to employ cross-training. If that isn’t an option, it means you may have to cover the work yourself while the bookkeeper is away. Ignoring the situation only creates a breeding ground for potential fraudulent behavior. I certainly don’t want to entertain that type of risk and I’m pretty sure you don’t, either.


The other roadblock we run into is “Well, our bookkeeper wouldn’t do that. It won’t happen here.” Just remember, every one of the small businesses that have experienced the shock and pain of embezzlement by a trusted employee never thought it could happen to them either. Isn’t something as simple as requiring an annual one-week minimum vacation the least you could do to reduce the risk of fraud? We think so!


It bears repeating that while this control is an important one, it falls down the list of controls we believe are even more effective at reducing the risk for fraud in your organization; especially when implemented together. With some care and effort, you can create an effective controls environment to support your bookkeeper and protect your business. A plan that includes the space for you or members of your team to monitor and cover the responsibilities of your bookkeeper while they are on vacation each year.



We hope you are enjoying this series on controls you can implement in your business yourself and find it valuable. Should you have any questions on the content, please feel free to contact me at cunderwood@ucentric.biz.


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