[simpleinterest]

And I just started three weeks ago after many rounds of interviews and getting to know the staff. I am the Controller of a small real estate development and property management company. I supervise two bookkeepers and I report to the CEO who is also a principal of the holding company. Underneath the holding company are multiple LLC’s that own and operate various real estate investments, and below that are investor partnerships that own the LLC’s. They use QuickBooks…. a separate file for each entity.

When I accepted the job, I assumed that I would have access to all bank accounts for all of the entities, as well as all of the QuickBooks files. However, I soon discovered that I lacked access to many of the QB accounts, and had to request access on a case-by-case basis, FROM MY BOOKKEEPER. As it turned out, my boss doesn’t want me to have access to any of the investor accounts in QB, or the corresponding bank accounts. He wants me to focus on the Holding Company, and the LLC’s – not the investors.

I’m having a hard time accepting this because:
1. Why does the bookkeeper get more access than me?
2. How can I supervise the work of the bookkeeper if I don’t have access to all of their work?
3. It puts both of us in and awkward situation, because I have to ask someone that I supervise, to give me access.
4. I’m used to the Controller being the one to ensure that controls are in place to safeguard assets and ensure accurate financial information.
5. Who reviews their reconcilements?
6. What happens if they quit?
7. What’s to stop them from committing fraud?
8. They still want me to oversee the calculation of distribution amounts to their investors.
9. How can be the banking admin if I can’t access all of the accounts?
10. If I’m not the banking admin, can I serve effectively as the company’s primary contact with the bank?

Here’s what makes me even more uncomfortable. Their tax CPA is also a long-time friend and an investor. He comes in almost every day, saves backup copies of quickbooks files to his hard drive, takes them back to his office, makes changes to the files, then brings them back to the office and restores the files. I have no idea what he is doing; he uses the admin credentials. I do know that they’ve had some serious turnover due to illness in the past, and that he has been helping to clean-up many messes. I like the guy. Today, he asked if we could just give him VPN access to make it easier to make changes.

Notwithstanding their tax accountant, does restricting my access seem reasonable? I’ve always had full access to all information.

I don’t think I’m asking for much, in terms of access, so it’s concerning that I’m already hitting barriers. Besides this, I really like my boss. If I let this slide, I’m concerned that it will create other consequences down the road, and make it difficult to effectively supervise my staff. I’m also a little jealous.

I wonder if they’re blocking my access for my own sake. I have a few theories on why they’re not giving me access, but I don’t really feel like pursuing. I just want to get past this. So far, none of my boss’s answers to my questions have been straightforward or satisfactory. I’m also trying hard not to turn this into a trust thing, or insinuate any wrong-doing.

I will be meeting with my boss in a few days to hopefully reach a solution. My main argument is that this separation of duty will not work. What questions should I ask, to prove my point? What possible solutions could I offer?

FAR 69, 85
AUD 84
BEC 85
REG 66, 87

[Missy]

I wouldn't jump to any conclusions, it could be as simple as your boss wants to introduce things gradually rather than overwhelm you right out of the gate. Have the conversation, have solid reasons why you need to see everything (beyond just that you have in the past). Three weeks in is rarely the time to be concerned about full visibility.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Anonymous]

Although these are legitimate concerns and questions, follow the boss's advice and learn about the Holding Company and the LLC's. How do you know you need to know about the ‘investor' QB's yet? Maybe that will be the next step.
Do you know everything about the Holding Co and the LLC's? Learn about the setup and status of those books and then if it is necessary and in your scope of duties, continue to inquire about the rest of the QB's. Your questions are good but it sounds like maybe you need more time to continue to learn how it all works.

[bhunt815]

Missy and silvermoon gave good advice, but I sense that there may be an intuition issue at play here as well. Like something doesn't “feel” right to you? Don't ignore that.

What has worked for me…Present your concerns to your boss as potential improvements to the current controls, not concerns. “In my experience, best practice is to have the investment account reconciliations reviewed by the Controller” or something like that.

FAR 04/11/2016 - 84
AUD 05/12/2016 - 79
BEC 07/06/2016 - 81
REG 08/29/2016

[se98]

I used to work for a company with a very similar set up to yours. I can't imagine my controller not having visibility to all of the entity accounts since they are so relevant to each other. As for the changes, in my experience we would never have had a non – employee make any changes to the books directly, especially with an administrator login messing with the audit trail. If they aren't covering something up it seems like they just aren't familiar or concerned with good controls. Good luck on your meeting.

FAR 84
REG 7/2016
BEC 8/2016
AUD 10/2016

[simpleinterest]

The thing is that we've already had several discussions and I've already outlined my concerns. I felt pretty good at our last meeting, that he at least understood where I was coming from. Then, the next morning, I received an email outlining our discussion and at the very end, he said that “The investment entities will be outside of your scope.”

He also used the argument that he didn't want to overwhelm me, but simply granting access is not overwhelming. Then he also says that the investment entities are not managed by the HC, and that I'm the Controller for the HC. This doesn't make much sense either, since my staff are the ones recording the accounting entries for these entities, reconciling the bank statements, etc. And he wants me to be involved in calculating the distribution amounts to the investors. There's probably not much activity flowing through these entities, but it seems like we're definitely involved. It feels awkward that my bookeeper has more access than I do. If I need access to something, I have to ask her first, and then she asks my boss. I think it will create problems in terms of supervising her work. For instance, some times things get paid out of the wrong accounts. Some time money gets wired or deposited to the wrong accounts. Many of the transactions will require entries on both sets of books, e.g. distribution from the LLC = income for the investor.

While there are red flags, there is no evidence of any wrongdoing. So I have probably overstated my subject line. I guess I'm more concerned about how this will affect my ability to function in my capacity. I'm not exactly green at this kind of work. I think one of the major hurdles is that he understands the organization, but not the accounting, and vice versa for me.

Another wrinkle is that the bookkeeper with all of the access is planning to leave pretty soon, which I have also brought up.

FAR 69, 85
AUD 84
BEC 85
REG 66, 87

[Missy]

Out of pure curiosity what was your experience prior to this job?

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[SaveBandit]

Your first post makes it sound like the LLCs roll up into the holding company, meaning, everything consolidates into one entity. Is that right? But your last post says the holding company has nothing to do with the the LLCs. Which is it?

If they all roll up under the HC, then yeah, you would need access to all of those things. If the LLCs are separate entities that are in no way connected to the HC, then your boss might have an argument, but it's still weird.

I don't really like what you're describing at all, to be honest. Someone close to me worked for a small company that was involved in IRS fraud. He had no knowledge of it at all. Once he figured it all out, he did all the right things, contacted lawyers, the IRS, etc. and he still ended up being on the hook for some of it purely because of his title – I think he was a VP or something. Their D&O had lapsed. Anyway, the whole thing was really, really fkked up. I honestly would not wish what he went through on anyone. I am not trying to scare you, but you should take an honest look at this situation – maybe confide in some old coworkers or accounting professors, and figure it out.

The thing about fraud is they make it seam so black in white in school. Have you ever read the Worldcom book? Clearly what those people did was wrong. But the real world is full of gray area. Maybe try applying the AICPA ethics framework. Good luck.

4 for 4

FAR 85
AUD 94
BEC 86
REG 90

[Missy]

See I work for a company that is owned by a venture capital company. They have no access to my QuickBooks files (I'd gladly give them access) nor do they have any interest, even if I ASK them for input/oversight they're completely hands off. Even my CFO can't get into my file, it's hosted on my server in my office and there's absolutely no access even for me outside the office. Nothing said here seems to give me a red flag because in my experience this is the way it works (the VC firm that owns us is huge, and owns companies you use daily).

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Anonymous]

Hey @simpleinterest, I recommend asking this question on another site. Maybe even GoingConcern.

I've brought up fraud related topics in the past and the majority of people will be in denial that fraud even exists in the accounting industry.

If I were in your shoes, I would at least document what I can on any workpapers or internal documents I complete. That should be sufficient to cover yourself and clear of any liability or wrongdoing. If you still feel uncomfortable with management, start seeking for a new position and put in your 2 wks asap before they “fire” you. Or you can let them fire you and collect unemployment while you take your time on a new job search.

Good luck.

[Missy]

This article may help. Even if many of us believe centralized responsibility is a best practice, decentralized responsibility is pretty widely practiced also. It's entirely possible to supervise the work of another without full access, think about auditing and how it's possible to uncover mistakes by asking the right questions, which you've clearly already done if you're aware payments are being made out of the wrong account. https://www.linkedin.com/pulse/centralized-vs-decentralized-finance-holdingcompanies-maxim-tyagly

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Mike J]

I would tend to agree with @missy. She's an HR professional.

You definitely want to ask your superiors about things you come across that you don't understand.

I'm sure you won't gain access to everything at first. We also don't know everything. Perhaps you are being brought along slowly as @MLA has said earlier.

But, before I take a job I always want to know about internal accountability. Who would I report to? Who would report to me, if anyone? Is there a clear hierarchy?

Also, I ask why this job is available? If you replaced someone a few weeks ago, I may reflect upon why.

Granted, I have not yet worked in Accounting. But, I learned at an early age to document what you do and are responsible for, especially if you feel you're on not steady grounds. eg. I would email my boss for confirmation of orders by asking a specific question. That way if it looks like I did something wrong, I can point to it.

So, when I read the following from @Angela, it clicked:

“Someone close to me worked for a small company that was involved in IRS fraud. He had no knowledge of it at all. Once he figured it all out, he did all the right things, contacted lawyers, the IRS, etc. and he still ended up being on the hook for some of it purely because of his title – I think he was a VP or something. Their D&O had lapsed. Anyway, the whole thing was really, really fkked up'”

Per SOX legislation, you can't necessarily feign ignorance. And it seems that IF something were to happen, your exposure would be significantly high.

[Missy]

There's a lot to be said for leaving a situation where you don't feel entirely comfortable and I'm certainly not trying to talk you into staying. But small tightly held companies operate completely differently than larger companies and it's not at all unusual for an external CPA to be the one checking the entries and reconciliations as long as that CPA is not performing attest services. My tax cpa checks my balance sheet reconciliations every month and often recommends adjusting entries which she would likely do herself if I engaged her to. Ask here how many cpa firms provide such transactional oversight to small businesses with only a bookkeeper, they all do. Maybe supervising this bookkeeper simply means making sure they work their required hours and being available to answer questions. It's a huge change in culture especially if you're used to a more traditional heirarchy and maybe this type of organizational structure just isn't for you.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[simpleinterest]

To answer a few questions, I've been working in controller and CFO roles for ten years now. Also some internal audit experience.

To be clear, personal liability is the least of my concerns; this is a small privately held company that does not produce any consolidated financials, doesn't even get an audit. There has been a lot of discussion about documenting but in this situation, I think it will do more harm than good; it creates more of an arms-length working relationship where what I want is to do is have conversations and work to build mutual trust. Most people are smart enough to know when you're documenting a conversation to CYA.

My main concern is whether this will impair my ability to function effectively, to exercise good control. Its hard to anticipate at the onset, the situations where I will need or want access to these accounts. But I've already run up against several speed bumps during my first three weeks there. In larger companies, I can see where compartmentalization is necessary and attainable but in small companies, people are forced to wear many hats; absences and turnover are less easily absorbed by the accounting department. I don't think its ever a good practice for only one employee to have access to the accounts.

FAR 69, 85
AUD 84
BEC 85
REG 66, 87

[cmcook]

Trust your gut.

[Earla Riopel (NYCARE)]

A good accounting job is hard to come by, especially for the new grads and those that are changing career. In my experience, many years ago, worked for 4 accounting firms (one in a Big 4), during tax season, this is what I noticed:
– If your superiors are asking you do something, do it. You are working for them and get compensated for it.
– If it appears that your job is not exactly what's in your mind, the position you applied for, just tough it out, wait a few months if it changes.
– Sometimes, firms/companies will hire you on the spot because they saw something on you that the hiring company likes.
– Sometimes, firms/companies will ask you to do things in different areas of its business, and work with your strongest, and happens to be the area that the hiring company could really use some help, and contribute to its bottom line.
– Try not to take it personal. The hiring company is in the business of making money. If they already have a few people who are doing the job that you applied for, and the company want to start another division. the hiring company might asked you to do that.
– Remember, always do the right thing. When you work for any companies, use your accounting training in everything you do. Take time to research if you can.
– This is one thing I always keep in mind, ‘always think as an accountant and a lawyer'. Even for CPA candidates, we have all the knowledge in these two areas. I have been using these skills for many years now, they keep me out of trouble, even if you're not looking for it.
– If you suspect that the company is doing any illegal or fraudulent activities, ask indirectly, your ‘guts' and accounting training will tell you.
– Companies get audited, your job is to do what you're asked to. You're superiors will go down first (if the company is found to be doing fraudulent activities). You're part is mostly safe, except of course, losing your job if the company is discontinued.

There are many areas in accounting, find the ones that you want to specialize with and at least makes decent income.

@simpleinterest enjoy life & your accounting career. Good luck.

[Author]

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