Letters to the Editor
Hon, Sarah J. DO
I read with interest “How You Can Avoid Being the Unwitting Victim of Employee Theft,” (In Practice, Feb. 4). I joined my practice 12 years ago, and I've always felt fortunate to be part of it. I have two partners and we all get along really well. A week before Christmas 2008, my partner received a telephone call from one of the hospital's vice presidents who asked if we realized that our rent hadn't been paid for a year.
When my partner spoke to our office manager of 23 years, she said, “Come to think of it, that's probably right, and furthermore, we weren't able to pay our payroll taxes for nearly two years.” She said she had been negotiating with a gentleman at the Internal Revenue Service [IRS] and that our accountants were aware of it. While all of us had considered her a friend and felt she was completely trustworthy, I was particularly close to her.
Up until that time, my partners and I had never written a check; I didn't even know where the checks were kept. The office manager also ran our payroll in-house and we never saw our bank statements. Soon after that discussion we conducted an external audit. The day before the audit began, the manager abruptly resigned.
The auditors found that a lot of information had been shredded, so we'll never know the extent of our problems. But we later established with the help of a new accounting firm that the office manager had been paying herself large amounts of undocumented overtime and personal expenses. We also discovered that we owed the IRS three times the amount she had told us and that she had failed to put in contributions for our employee retirement accounts for the past two years.
After she resigned, we quickly learned that nearly all accounts with our vendors were several months in arrears. We had to temporarily suspend our own salaries and add early morning office hours in order to repay these debts. In the past year, we've made many other changes. I always open the mail. I've learned to work with Quickbooks, and do all the bookkeeping myself. It's worth the extra time, and truthfully, it doesn't take that long. We now have a payroll service and I've learned how to read payroll summaries. We've also segregated office duties. For example, while I write the checks, another partner must sign them. We communicate and meet regularly with our accountant.
Our lack of oversight put us in financial and legal jeopardy. My partners and I have vowed that we will never let anyone handle the finances but us. No one will ever be given that much power again.
Sarah J. Hon, DO
Kansas City, MO