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What steps can I take to protect my company from an unethical employee?

Begin with the bank reconciliation:  Be sure the individual opening, reviewing and reconciling the bank statement is different from those creating deposits and checks within QuickBooks.

Consider hiring your CPA or QuickBooks advisor to complete the bank reconciliation when you have too few employees to adequately segregate important financing activities.  With a high speed internet connection , reconciling an account from a remote location is easily accomplished.  The owner can participate by opening the bank statement envelope  and  reviewing  the cleared transactions before anyone else.  Keep an eye open for unusual electronic withdrawals, and compare deposits per bank to a deposit report within QuickBooks for the same period.

How do I generate a deposit report that will total? From the reports menu> Select custom transaction detail report>click on the 2nd tab titled "filters">select the filter "account" then place a check next to your business checking account >add a second filter for transaction type and select "deposit".  The credit column on this report will never contain data so remove it from the report. Find the diamond icon to the right of the word "credit", click and hold, drag it to the diamond on the left side of the word credit then release the mouse hold.  You will want to utilize this report every month so lets give it a title and memorize for future use.  From the report button bar, click on the modify report button>click on the Header/Footer tab and change the report title>click OK.  Use the memorize button on the button bar to save the report for future use. Memorized reports are available under the reports menu located at the very top of the QuickBooks window.    Don't forget to change the date range the next time you use this report.

Audit Trail tracks deletions/modifications to transactions. Using the audit trail feature in QuickBooks creates more data and larger files, but it is a great help in checking out who did what and when. QuickBooks users can turn on the audit trail from the Edit menu> choose Preference>click on Account in the left-hand scroll box>from the Company Preferences tab, select the "Use audit trail checkbox.", click OK. The audit trail feature will keep a record of all transactions entered, every transaction revision, date/time of revision, and the individual’s name. Audit trail reports are available under "accountant & taxes" menu option within the reports menu.

Limit access to only those areas of QuickBooks necessary to do the job - If control is an important issue, you want to ensure that no one member of the administrative staff has the right to make certain changes without the authority of others. Determine what areas of the software are important for each user to access.  Use passwords to protect your data, limit access, and provide confidentiality of information. To create passwords go to "Set up passwords" which can be found under the Company file menu.  The administrator has complete access to the entire QuickBooks program and sets up the security access for the rest of the staff.  One  individual is named as administrator (business owner or controller is an ideal choice).  Upon setting up the administrator's password be sure to provide the password to your CPA for safekeeping.  A forgotten administrator's password makes the QuickBooks file inaccessible (very costly to have removed by Intuit).  However, it is easy to fix when an employee (not admin) has forgotten  his user password. To remedy, delete the user name and set up a new user.    Remind staff of the importance of keeping passwords to themselves. While users (other than the administrator) may not change the security access levels, they may change their own password. . 

Why does the inventory valuation report differ from  inventory value in the Balance Sheet?

Items can be entered using any of the following transaction types:
  • To increase inventory- bill, credit card, check, inventory adjustment.
  • To reduce inventory due to items sold- invoice, sales receipt, statement charges.
  • To decrease  inventory -inventory adjustment, bill credits, credit card refund, credit memo. 

To record a purchase from a vendor for inventory, the quantity and inventory item is entered on the "item tab" of the transaction. Any of these transaction types, that have used the "item tab" and also have an "inventory item" will appear on the inventory valuation report.   Read on

Need an inventory package or a lite manufacturing software that integrates with QuickBooks? Call us 800-216-0763 
Why doesn't my bank account reconcile?
Look for transposed numbers- switching a number (ie: 45 instead of 54)  is a very common mistake.  Transposition errors are divisible by nine (as long as there are no other mistakes within the bank reconciliation.

Look for omitted transactions- if you see a  transaction on the bank statement that has cleared the bank but you do not see it in the bank reconciliation window, enter this missing transaction (be sure to choose a date within the month you are reconciling).  . With the bank debit card becoming very popular among small business owners, you may find regular cash machine withdrawals, service charges, direct deposits and debit card purchases that were never entered into QuickBooks. Be sure to enter each of these in order to reconcile. 

Did you enter the transaction but don't see it in the bank reconciliation window? Check the original transaction to see if it was entered into the wrong bank account.  Use the find feature under the Edit menu to search for a transaction based on the amount. Once found, edit the transaction by selecting the correct bank account.

Look for reversed transactions
- Did you enter a write check transaction by mistake when the transaction should have been a deposit?

Look for a transaction that is equal to the difference- For example, did you neglect to place a check mark next to a check that cleared?

Make sure you are working with the right bank account.  If you have multiple bank accounts it is easy to end up recording checks and deposits in the wrong account. It is just as easy to end up in the wrong reconciliation screen. . 


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