Accounting

Use QuickBooks’ Tools to Prevent Financial Fraud

Whether your accounting tasks are done on a single PC or you have multiple users working on different screens, it’s critical that you make use of all that QuickBooks offers in terms of internal controls.

First Stop: Audit Trail

An audit trail is a very large report that displays every addition, deletion and modification of every transaction. In older versions of QuickBooks you could turn it on and off, but it’s permanently on now.

Because of its size, you’ll probably have to use QuickBooks’ filtering tools to zero in on the user and/or date(s) you’re looking for. Go to Reports | Accountant & Taxes | Audit Trail. Click Customize Report | Filters to set up your search.

Your audit trail won’t alert you when someone tries to enter a prohibited area, and it won’t detect changes to lists. Setting up permissions will help (Company | Set Up Users and Passwords | Set Up Users), but you need more than that.

Figure 1: Be especially careful when granting user access to areas that contain customer, vendor and employee information.

Run the Right Reports

Other QuickBooks features help prevent fraud as well. Review these reports regularly:

Closing Date Exception. Why were those changes necessary?
Voided/Deleted Transactions. Is there supporting documentation? Should you be reviewing these daily?
Expenses by Vendor Detail. Look for irregularities, especially multiple payments made to a vendor in a short period of time.
Check registers. Use the Balance Sheet for this. Go to Reports | Company & Financial | Balance Sheet Standard and customize the report for the correct period and, if necessary, for specific customers, vendors and/or jobs.

Adhere to Best Practices

You undoubtedly implement financial best practices in your personal life. You reconcile your accounts. You don’t give your online banking password to anyone. And you glance through your recently-posted transactions on your financial institutions’ websites.

If your company is large enough that you have multiple accounting employees, you probably can’t be as hands-on as you are at home. But you can still set up internal control procedures.

Figure 2: Debit? Credit? Reverse the transaction? No one should be making General Journal entries but you. It’s easy to err here; talk to us before using this feature.

For example, if your company has grown to the point where you’re removed from the daily workflow, you may still want to have approval rights for some procedures, like bank balance adjustments, refunds and credits, printed checks (you should still be signing them), timesheets and expense reports.

It goes without saying that you should password-protect your QuickBooks company file and change the password regularly, even–and especially–if you are the entire accounting department. It’s important to protect yourself from external fraud too. We can do a review of your security procedures and make suggestions.

Reinforce the Rules

Figure 3: Anyone in your company who has access to accounting data should have a background check.

Know who your employees are (consider running background checks) and, if you can, rotate the duties assigned to accounting staff. If you have only one person managing all of your bookkeeping work, conduct an even more thorough background search: credit, references, and criminal activity.

Finally, make sure that all employees understand the definition and consequences of fraud. Let them know about the steps being taken to prevent it, but do some unannounced auditing on your own. Include a session on fraud in orientation and get current staff up to speed. Explain that this is necessary for their protection, too. Make it easy to report fraud anonymously, with no fear of repercussions.

This may seem like a lot of extra tasks in your workday, but imagine the time you’ll lose tracking down fraudulent activity if it occurs.

If you have questions on this subject, or anything else, don’t hesitate to email or give us a call. We’re here to be your partner.

By Leon Clinton
March 26, 2013

2013: The Year You Go Mobile With Financial Data?

There are only a few reasons why you wouldn’t be using QuickBooks Mobile on your smartphone. Maybe you don’t have a smartphone. Or when you’re out of the office, you don’t want to be available for accounting work. Or you might not think that it has enough features to make it worth using.

While the first two reasons are matters of personal preference, the third just isn’t true. QuickBooks Mobile automatically–and almost instantly–synchronizes the data from your desktop or laptop computer copy of QuickBooks. While it’s only focused on sales, not payables or payroll, you can manage receivables quite nicely whether you’re in a customer’s office or at a trade show or community event–or sitting on the couch at home.

Figure 1: You can see this screen no matter where you and your smartphone are (the recently-upgraded Android version is pictured here).

Countless Scenarios

There are numerous situations where you might want to access, add or edit customers, estimates, invoices, sales receipts or payments when you’re not near the PC where QuickBooks is installed, like these:

You do a half day of onsite training and your client wants to pay you cash right then to qualify for a discount. You can record the payment and email a sales receipt.
You’re on the road and you want to see how well your bookkeeper is managing receivables. QuickBooks Mobile displays three views: recent activity, today and upcoming.
You’re with a client who would like to give you a check to get current, but he or she can’t find the invoice. Rather than calling your office and sitting on hold until someone has time to look, you can pull up the form on your smartphone to discuss it.

Figure 2: You can record sales receipts and payments on your smartphone, and even schedule appointments that move to your Google calendar.

Paper or Plastic?

If you’ve been in business for very long and still don’t accept credit cards, you have an idea of how many sales you’ve lost. And QuickBooks Mobile won’t let you do so, anyway. You’ll need to get a merchant account from Intuit Merchant Service for QuickBooks (fees apply). A merchant account allows you to accept plastic through QuickBooks itself, your web browser, your web storefront–and on your smartphone or iPad.

Figure 3: Missed your flight and afraid you’ll miss the current payroll run, too? Intuit Online Payroll gives you access from your Android or iPhone.

To do so, you’ll need to apply for a merchant account and download Intuit’s free GoPayment app. You can either swipe cards on the free mobile reader or type numbers in. Your customers sign their names on the surface of your mobile device, and you can print or email a receipt.

Figure 4: You’ll need to get acquainted with the Intuit Merchant Service Center to work with credit card payments.

It would be nice if those credit card payments were just instantly zapped into the right places in QuickBooks, but alas, it isn’t so. You’ll need to do some setup and processing both within QuickBooks and in the online Intuit Merchant Service Center. We can help you with setup and your initial transactions to make sure all of your payments get through and are deposited and/or credited correctly.

We think you’ll find that once you start using all of the mobile payment services that Intuit offers, you’ll wonder what took you so long.

Are You Defining Items In QuickBooks Correctly?

Figure 1: Clearly-defined items result in precise reports.

Obviously, you’re using QuickBooks because you buy and/or sell products and/or services. You want to know at least weekly — if not daily — what’s selling and what’s not, so you can make informed plans about your company’s future.

You get that information from the reports that you so painstakingly customize and create. But their accuracy depends in large part on how carefully you define each item. This can be a laborious process, but it’s a critical part of QuickBooks’ foundation.

QuickBooks’ Item Lineup

You may not be aware of all of your options here. So let’s take a look at what you see when you go to Lists | Item List | Item | New:

Service. Simple enough. Do you or your employees do something for clients? Training? Construction labor? Web design? This is usually tracked by the hour.

Inventory Part. If you want to maintain detailed records about inventory that contain up-to-date information about value, quantities on hand and cost of goods sold, you must define these items as inventory parts. Before you start creating individual records, make sure that QuickBooks is set up for this purpose. Go to Edit | Preferences | Items & Inventory | Company Preferences and select the desired options there, like this:

Figure 2: QuickBooks needs to know that you’re planning to track at least some items as inventory parts.

Inventory Assembly. Just what it sounds like; it’s sometimes referred to as a Bill of Materials. Do you sell items that actually consist of multiple individual products, services and/or other charges (though you may also sell the parts separately)? If you’re planning to track the compilations as individual units, then you must define them as assemblies.

Non-Inventory Parts. If you don’t track inventory, you can set up items as non-inventory parts. Even if you do track inventory, there may be times when you’ll want to use this designation. For instance, you might sell something to a customer that they asked you to obtain, but you don’t plan to stock it. In that case, QuickBooks only records the incoming and outgoing funds.

Figure 3: The New Item window looks a bit intimidating, but it’s critical that you complete it thoroughly and correctly. We can help you get started.

Other Charges. This is a catch-all category for items like delivery charges or setup fees. You can’t designate a unit or measure here; they’re just standard costs.

Groups. Unlike assemblies, these are not recorded as individual inventory units. Use this designation when you sell a combination of items together frequently but you don’t want them tracked as one entity.

Discount. This is a fixed amount or a percentage that you subtract from a subtotal or total.

Payment. Normally, you would use the Receive Payments window to record a payment made. But if your customer has made a partial or advance payment upfront, use this item to subtract it from the total when you create the invoice or statement.

Figure 4: Use the Payment item to record an upfront remittance.

Sales Tax Item. One sales tax, one rate, one agency.

Sales Tax Group. If a sale requires two or more sales tax items, QuickBooks calculates the total and displays it for the customer, but the items are tracked individually.

Additional Actions

The Item menu provides other options for working with items. You can:

Edit or delete
Duplicate
Make inactive
Find in transactions and
Customize the list’s columns.

Let us know if you’re not confident about items you’ve already created or if you’re just getting started with this important QuickBooks feature. Some extra work and attention upfront can save you from hours of back-tracking and frustration–and from reports that don’t tell the truth.