We have all heard the stories of some elderly bookkeeper who had been stealing from her employer for the last twelve years or so. The total amount of the embezzlement is usually staggering. Most people are shocked that this lovely person could have done this.

I don't mean to pick on elderly bookkeepers, but the facts are that this is not unusual. The usual victims are small businesses that lack internal controls.

Money has a way of making the honest become dishonest. Money is useful and is needed and desired by everyone on the planet. The financial transactions of a business need to be safeguarded to stop theft.

Internal transaction controls that should be implemented in a business:

• Transactions should conform to GAAP (generally accepted accounting principles).
  
  
• Cash and other assets should be handled only as allowed by management.
  
  
• Reconciliations of cash and bank accounts need to be kept current.
  
  
• Internal and/or external auditors need to audit the company's system and transactions. This needs to occur on a regular basis and needs to include accounts payable and accounts receivable transactions.
  
  

• There should be a plan to have separation of duties for accounting personnel.  No one person should be allowed to handle cash and keep records for the cash.
  
  
• Accounting personnel should be required to take their vacations and other personnel should do their jobs while they are gone.
  
  
• Personnel that handle cash should be bonded.