There was no load, just an invoice. The reason for picking a busy route was so that the BS invoice would be just one among many similar ones. The goods supposedly carried by BS Transport would have actually been carried by someone else and it would take a keen-eyed auditor to spot the fraud.
The beauty of the scheme is that Bill can do it on his own and does not need a collaborator as he might with other more complicated schemes. One such would be to get one of the real transport companies to send in fraudulent invoices and then to share the ‘profit’.
Because you’re getting a freebie, ** paid for by your employer, and they don’t know it, ** because you’re saying that the widget you bought for them cost $29.95.
That’s fraud. You’re making a false statement for your own financial benefit.
If you tell the boss that you’ve got a two for one coupon for the widgets, isn’t your boss more likely to say: “Great! Buy two of them. We always need new widgets. They wear out so quickly.”
Instead, you’re saying to the boss, “Here’s the widget. It cost $29.95,” and you never mention the two for one, or the widget in your pocket that your company paid for. That’s a lie by omission to get a benefit from your employer that your employer doesn’t know about. Fraud.
If you say to the boss you got a two for one by your diligence on behalf of the employer, and your boss says: “Good for you, but we only need the one widget because we’re going to be moving to equipment that takes bidgets before that widget will wear out and need to be replaced. You can take the extra widget home - it’s yours.” Not fraud, because of full disclosure by you, and the boss has made the call that you can have the extra one.
It’s the lack of transparency for your own personal benefit that turns it into fraud.
Maybe I’m not understanding, but your examples don’t seem to line up with either the airline miles or the 2-for1 coupon situation.
If the miles shouldn’t be accruing to my account, wouldn’t businesses step in and stop it? I’ve put up with a great deal of BS based on “the IRS might come after us!” even when there is no liability on their part.
I don’t agree with you, but I’m willing to be persuaded I’m wrong if you can give me some actual law or regulation on this. I know you’re a lawyer in Canada; I’m in the U.S.; I’ll take info from either country that supports your case.
You would cause them to add to their book of account that they bought a single widget for $29.95. In fact, they bought two, and you concealed from them that fact and failed to give them the second widget. They bought and paid for that second widget, but it went into your pocket, which is theft.
It’s a difference of degree, not of kind, from telling the company that you bought them a single widget for $2995, giving Widgets-R-Us $29.95 and putting $2965.05 in your own bank account, or telling the company you bought ten laptops and then putting nine into service at the company and giving one to your girlfriend.
In general the various taxation authorities get enthusiastic if there is a benefit to an employee that derives from his employment. They feel that they are owed their cut, no matter what the actual circumstances. Airline points became a really difficult one here in Oz some time ago. The tax office felt that if you gained points based upon flights paid for by your employer, you were getting in-kind income, and should pay tax on the value. The airlines argued that it was up to them who got points, not the employer or the tax office, and it was therefore not income. Eventually the courts agreed with them. But it was a large, public and very expensive supreme court job. And the outcome only applies here in Oz. YMMV.
Even then it gets messy. There was a time when one employer of mine did a deal with an airline for all of company flights, and as part of this, the points came back to the employer. (Which as it turned out ended up paying for business class flights for the same people that organised the deal. No conflict of interest there your honour.) I know of other companies that require that points are transferred to them.
In the case of a two for one deal, you are skating on thin ice. You need to be absolutely sure that no part of the deal affects your employer’s rights in the transaction. What if the item purchased is not fit for purpose and your employer demands a refund? The shop is hardly going to refund the money if they only get one item back. What about liability issues? Often there is no problem if everything goes fine. If something goes sour, the mess that requires unravelling can be lucrative employment for lawyers.
You also may run afoul of conflict of interest ethical issues. A two for one deal that gives you a freebie can be considered as an unethical inducement to trade on behalf of your employer with that company. Many employers have quite strict guidelines as to what you may accept. They would almost certainly argue that a two for one deal attached to a purchase where you took home the other item breached these guidelines. Many vendors offer interesting freebies on large items. Buy a $10,000 logic analyser, get a free Fluke multimeter, etc. Take that multimeter home and you get fired if found out. Even if the multimeter never saw the light of day on the invoice, and arrived, addressed to you, weeks later. It isn’t yours.
I took over the sales department of a business in Japan which was losing money. One of the reasons the previous general manager was booted was that the expenses had gotten crazy. Sale people were taking each other out to drink (in Tokyo hostess bars!). Changing the rules for documentation dramatically reduced expenses.
There are stories (probably urban legends) about when people would set up branch offices in Japan for Western companies, that they would have dummy billings for nonexistent services then only get caught when they attempted to end the practice.
OK, gotcha. So it wouldn’t have had the backstory on how he had time to devise a dramatic presentation which would appear spontaneous.
It’s not that the miles shouldn’t be accruing to your account from the employer’s perspective. The miles are potentially taxable to you, not to the employer, so they aren’t going to care.
Having a receipt doesn’t prevent that at all. All it does is let the accountants verify that there was indeed a widget bought that corresponds to that charge.
I guess my issue is that so much of working in an organization is centered around trust- you trust that your co-workers know what they’re doing. You trust that the sales guys are busting their humps to sell your company’s products or services. You trust that the guys making/providing are doing that well, and so on. And they do the same for you and your job. You all assume that you all have the company’s best interests in mind.
Then some accountants show up and don’t act that way- they treat you like you’re a crook waiting to happen, and put a lot of handicaps in front of doing your job in a timely, effective manner, all in the name of internal controls. And they also perform cost accounting analyses that as often as not make things harder by trimming “fat” that while it may be a little bit extraneous, is often the grease that makes things work smoothly. And they do all this through the mechanism of being what looks like nitpicky and pedantic to an extreme.
So it’s not surprising at all to me that most people who aren’t accountants would have a dim view of their activities and motives. A lot of the time it seems like worship at the altar of “technically correct is the best kind of correct”- I get the impression that many of them would prefer to work for a sinking ship with perfect books than for a profitable, growing concern with sloppy books.
If you find it a “handicap” to provide receipts for business purchases, any problems you have in doing your job effectively are not accounting-related.
I heard about a company where I worked where the plant manager was in the boss’s office; when he saw a flat-bed truck going out the gate. He jumped into his car and chased the truck down, pulled it over. Turns out the truck’s load included a very large solid copper piece of equipment that had been sitting out back as a spare. Investigation showed the shipping clerk (not even a manager) had been arranging for random valuable pieces to be picked up and trucked to a scrap dealer. To top it off, the shipping cost had been charged to the company. The drivers said they though the clerk was a boss and authorized to order shipping; upshot was that the trucking company was given a list of those authorized to request shipping, including their pictures.
Also heard of a VP in a construction company who created his own “consulting” company and charged amounts to assorted construction projects. He was caught when he went on vacation (a risk for any fraudster). The invoices would normally pile up on his desk for his approval, but the secretary took one to an new engineer - “you just transferred in from this site, can I pay this right away?” This was a story from our accounting prof. He said that rather than spent time and money chasing the guy for money he’d probably already spent or hidden away, they put the estimated total (around a million dollars) on his tax form and let Revenue Canada deal with him. marginal rate in Canada would be about 42%.
The company I dealt with sorted out one problem - some plant managers would take along an underling on a business lunch, then have him file the expense claim so they could approve it. new rule came out, most senior person at a meeting must submit the expense.
Of course, if an employer said they get to recoup points, the simplest thing is to not register for a points card.
It sounds like you’re used to working for small, possibly family-run, businesses and are having trouble seeing how the more ad-hoc practices of a small business don’t scale to even a medium-sized business, let alone a large corporation. Accountants don’t spontaneously “show up” within a business and start enacting procedures to please themselves. Accounting is an integral business function, and when policies change it’s driven by management to address problems, like an ongoing problem with embezzling.
In other words, if a business goes from permissive practices regarding employee spending to accountants “showing up” and “put[ting] a lot of handicaps” into the process, it’s because management noticed exactly much money is disappearing and realized their allegedly trustworthy employees* are actually stealing whenever they get the chance. Growing businesses attract problems here precisely because growth can mask a lot of trouble and justify waste. But growth doesn’t continue forever, and when it levels off, unaccounted losses become a more evident problem. Really, the idea of a profitable business with sloppy books is an oxymoron. When someone refers to sloppy books, it means there’s money appearing or disappearing without any indication as to how or why, not just that there isn’t a receipt backing a debit for an employee reimbursement.
People seem to insist on employees falling into some dichotomy of “trustworthy” and “thief”, where the “trustworthy” category includes all the competent employees. In reality, most embezzlers don’t think of themselves as doing anything wrong. “It’s only a little bit and the company can afford it, the boss would be fine with it since I’m such a good employee, person X is doing it and not getting in trouble so it must be OK, I’m just getting my money back from this other time I did something, etc.” Tacitly encourage these attitudes long enough and losses will pile up from attrition. Policies are as much about detecting loss as discouraging it in the first place.
Agree as well about there’s no dichotomy of “trustworthy and competent employees” versus dishonest employees.
At one place where I worked, a major fraudster was uncovered (when he went on vacation - a dangerous thing for fraudsters to do). He was a very competent employee - that’s why he was able to find the weaknesses in the accounting system and exploit them.
That whole “if only he had used his powers for good rather than evil” thingie.
I wasn’t talking about loss or embezzlement, but rather about cost accounting exercises that identify ways to save money that are often penny wise, but that make it harder to do one’s job, or more unpleasant as you do it. Stuff like raising/lowering the thermostats, buying the cheapest pens possible, or delaying “non-critical” stuff etc…
That’s actually one of the most eye-opening things about switching to work in the public sector- since there’s no profit motive, when shit gets worn out, it gets replaced. We don’t have bean-counters saying that if we keep the ratty-assed carpet 5 more years, it makes a 0.0003% impact to the company’s profit.
I understand that accounting is a fundamental business function. I just don’t like the way that a lot of places seem to be run by the accountants, and that to many of them, the process or details seem more important than the goal. Not seeing the forest for the trees, and all that.
I’ve dealt with way too many in my years as a developer and business analyst to not realize that. It’s a mindset that I can’t really get my head around- drab, hyper-ordered, super detail oriented, and no room for creativity or innovation.
Those policies usually don’t even work for small business- maybe the smallest , where there aren’t any non-family employees but not anything bigger. My husband worked for a small business that had been run by the same family for 50 or so years before he started working there. It was the kind of small business where Howie hired Beanie because Beanie’s father had worked for Howie’s father and everyone trusted each other and all of that. My husband worked there for three years and got fed up because everytime he fired someone for stealing, Howie rehired them. The clerks were stealing cans of paint and selling them on the street, and the managers were selling kitchen cabinets and putting the money in their pockets. A year or so after my husband left, Howie was out of business and driving a school bus - mainly because all the people he trusted robbed him blind. Which TBH they might not have done in a different situation - some people will always be thieves and others will always be honest, but there’s a big group in the middle that will do whatever they can get away with.
That’s the problem without proper controls. People assume they can “help themselves”. They treat skimming as a perk, even if in their mind they would never walk into a store and walk out with unpaid merchandise. “Everyone is doing it” justifies it.
Remember the story about how some auto executive (Chrysler?) was pulled over somewhere in the Midwest and given a ticket for driving an auto with the speedometer disconnected (apparently a very serious offense)? Seems it had been a standard perk that the executives could go down to the factory, pull a vehicle out of inventory, take it on vacation with the odometer disconnected, and then bring it back and the company would sell it as new, never driven. When shady used car dealers do that, it’s a criminal offense - but the execs didn’t see that the law applied to them. proper accounting, enforcing legal requirements and following procedures, avoids this attitude evolving.
Maybe where you work in the public sector- but not the public sector jobs I’ve had. I can’t even order White out from Staples- I have to order some no-name brand that doesn’t work well and the worst pens and markers I’ve even seen - and I certainly won’t be buying flash drives from Staples. Sure, we get them from Staples - but I have to submit a purchase order to someone 150 miles away who will order them and send them to me because my agency credit card doesn’t work at Staples- it’s only for travel so it works at hotels, restaurants, to buy train tickets and that’s about it. Around here, it’s the government offices that keep the ratty carpet an extra 5 years.