The company I work for has recently been taken over by a new owner. I am responsible for accounts payable and receivable. The new owner’s wife comes in periodically to cut checks that I am not “allowed” to. However, I do have access to review these checks. Anyway, I’ve noticed a few that have raised questions. The owner’s expense checks are always even numbers, and the accounts that the money is divided into are vehicles, office supplies, employee parties, travel and gas and mileage. He doesn’t buy office supplies, he doesn’t travel anywhere business related, he hardly drives anywhere on behalf of the company, and we never have employee parties. The amounts are never reasonable; his expense checks are usually between $4,000 and $5,000 per month. We’re a small company; there is nothing to justify those amounts. What really bothered me was that he paid his personal property taxes from the company’s checking account. Is this considered embezzlement, even though he is the owner? If so, what am I supposed to do? I can’t lose my job, and I don’t want to get in trouble if our CPA catches on, which at this time of the year, he just might. I am certain he does not have any proof to back up those expenses. This issue has been plaguing me for a while, I would appreciate any advice you can give. Thanks.
First off, let me say that I am not an attorney or a CPA so any advice I give you is strictly from my own personal experience. I am fortunate enough to have several attorney and CPA contacts to obtain information as needed.
When an owner takes money from a company that is clearly not an expensed item for which you have a valid receipt, that money should be classified as an “owner draw or owner loan” which would be considered an “other asset” on the balance sheet.
There obviously are tax implications related to what the owner is doing. I wouldn’t necessarily call this embezzlement however; it is obvious that he is falsifying accounting documentation which could lead to future problems if he were ever to be audited.
My best advice to you is to be honest with the CPA, because ultimately that person takes on the responsibility for creating accurate financials. I know you need your job, but I think if you were to simply point out to the CPA what was going on, that person will be able to do a more thorough review and decide if this client is someone he/she is willing to work with at all. There are always ethical and unethical people in every profession, but it should be up to that person if they want to assume the risk. I would say that most would appreciate your honesty.
In addition, never sign anything for this company. This includes banking information, tax forms, etc. You do not want to put yourself in a position where you take any responsibility for what the owner is doing. If I were you, I would look for another job.