: Successful Nonprofits

A Conversation with Forensic Accountant Tiffany Couch, Author of The Thief in Your Company

It is Almost Always Someone You Trust

A Conversation with Forensic Accountant Tiffany Couch, Author of The Thief in Your Company

It is Almost Always Someone You Trust

by GoldenburgGroup


Nonprofit fraud is the topic of this conversation with Tiffany Couch, CEO of Acuity Forensics. Sharing true stories of fraud found in her book, The Thief in Your Company, Tiffany breaks down what fraud looks like, who is likely to do it, and how to prevent it from happening at your organization.

The emotional cost of fraud is sometimes the most difficult piece.
People ask themselves, “What is wrong with me? How did I trust that person?”

Timestamped Highlights

(4:18) The emotional costs of fraud
(5:23) The top 3 most-trusted individuals in the organization
(6:38) Great! You have an employee you like that well, BUT…
(9:09) Ego problem or fraud?
(9:52) Skimming schemes and the priest who stole from the church
(15:12) How limited resources factor into fraud
(16:06) Pardon my French…but review the damn bank statement!


Listen to the Episode Below!

(21:58) Locking down company credit cards
(24:27) Even if you know the answer, ask the question
(25:22) Expense reimbursement requests: the low-

Tiffany Couch, 1991 Cotton Queen. She is in the back of the float (“on my throne”), hand up high, holding the flowers with the “queen” wave!

hanging fruit of fraud
(27:10) Setting the threshold of “that’s not okay”
(28:10) The BIG problem with the “$20 and under” rule
(29:23) Basic and effective internal controls
(35:31) A tiara and a title



Tiffany’s Book: The Thief in Your Company
Tiffany’s firm: www.acuityforensics.com
Stop Nonprofit Fraud: www.stopnonprofitfraud.com
Link for discount code for Stop Nonprofit Fraud: https://www.acuityacademy.com/dolph

Transcript – Episode 122 – It Is Almost Always Someone You Trust – A Conversation with Forensic Accountant Tiffany Couch, Author of The Thief in Your Company

The most insidious part of this crime is that the person who commits it is almost always among the top 3 most trusted and well-liked individuals in the organization.

Dolph Goldenburg: Welcome to the Successful Nonprofits™ Podcast. I’m your host Dolph Goldenburg. True crime podcasts are really popular right now, and we’ll be talking true nonprofit crimes with our guest Tiffany Couch. Today, I’m talking with the CEO and founder of Acuity Forensics. Now, Tiffany is a nationally-recognized forensic accountant. If you’re thinking, “Hmm, oh gosh, Dolph has an account on today. What other podcasts or in my library, because I’m about to turn this one off,” I have to tell you to stop. You have got to hear this show. This accountant is going to rock your world. Tiffany wrote an incredibly compelling book, The Thief in Your Company, which provides the low down on different types of fraud, signs of fraud, how to make whistleblowers feel safe and way more than that. And let me tell you, she didn’t do it through the dry boring texts that you would expect an accountant would.

She did it the way we love in the nonprofit sector – by telling stories. of real forensic cases that she’s cracked, real fraud that she’s found. And through those stories, she helps us understand how we can find fraud and waste in our own organizations. So, let me tell you, this book reads like a series of mini mysteries. Case after case from soccer moms getting thousands to superstar executive director who took more than $400,000, these stories will hold you in their grip. And here’s how much of a page turner this book is. I say often on this podcast that I travel an inordinate amount, and last year, I flew about 95,000 miles with Delta alone. And so, I always want to be the first person off the plane because I spent so much time on a plane. But this past week I found myself sitting on the plane after it landed just so I could finish the last chapter of this book.

Seriously listeners, it’s like the plane was empty. There was nobody left. And I’m like, page turning, I got to get to the end. I am loving this book. The flight attendants or laughing at me, they’re like, no one ever stays on a plane to finish the chapter. So, that’s how good this book is. Now, in addition to her work with the business and nonprofit sector, Tiffany has also created a new educational component called Stop Nonprofit Fraud, which you can find at www.stopnonprofitfraud.com. Now, we’re going to talk about that some more at the end of this episode as well. So settle in. I know this has been a long intro, but when I really loved the book, it gets a little long. Settle in for this wild ride of storytelling and learn how to make your nonprofit a more secure environment.

Tiffany, welcome to the podcast.

Tiffany Couch: Thank you so much, and thank you so much for that wonderful intro. I so appreciate it.

Dolph Goldenburg: We’re on video, so I actually have to show you every page of this book is underlined, tabbed, dog-eared, and I mean there were times that literally like I thought, yeah, I’ve seen this. Oh yeah, I’ve seen this. So, if I had $100 million, Tiffany, I was been $95 million buying every nonprofit board treasurer or a copy of this book, and then I’d take the other $5 million for my retirement. But the first $95 million would go to distribute this book to every single treasurer who serves on a nonprofit board.

Tiffany Couch: I totally agree. Only in that I never want them to have to meet a thief in their nonprofit or ever have to meet me.

Dolph Goldenburg: Yes. Now one of the things that you talked about a good bit in your book, and I thought this would be a good place for us to start. You know, when we think about embezzlement or fraud in the nonprofit sector, we think about money lost and money channeled away from mission. But you also talked about the emotional cost of fraud.

Good news: it does not take more money to have basic but really strong internal controls.

Tiffany Couch: I do, I do. It’s a big part of what I do and when I see, and I don’t think we are talking about that part enough.

Dolph Goldenburg: Let’s talk about it for a second. What is the emotional cost to fraud?

Tiffany Couch: It’s the bigger cost. In fact, I find that when I’m dealing with my clients, when they call and they’ve got an issue, I often wish that in addition to that accounting degree that I have, that I also had a psychology degree because I’m literally counseling these people through all of these emotions, which usually start with, what’s wrong with me that I didn’t seem it’s coming? How did I trust this person and not see this? It just goes on from there to anger to disappointment. It runs the gamut.

Dolph Goldenburg: And you also made a point multiple times in the book and saying that oftentimes it’s the person you trust the most who’s been with you 10, 20, 30 years. That’s the one that’s finding some way to take money out of the organization. And you talk about how it’s that breach of trust that really hurts as well.

Tiffany Couch: Right? So, that’s a really great point. It’s where I like to start. We never think fraud can happen to us. It can. The most insidious part of these crimes is that it is always, every single case I’ve ever done, the person who’s perpetrated the crime is the top three, top five maybe, but usually the top three most trusted individuals, most well-liked individuals in the organization. In other words, it’s the last person anybody expects to do such a thing. And let’s think about it. If I didn’t like you, if I didn’t trust you, am I going to let you take my money to the bank? Am I going to let you write my checks? Am I going to let you process payroll? No. And so, these folks use their ability to be liked, to be trusted to perpetrate these crimes. With really nice people, we fall into that [faux] sense of security that this really nice, really well trusted person is handling everything. And we don’t often do some of those double checks. So it’s a great way to start this off.

Dolph Goldenburg: Let me ask you, what do you say to the nonprofit executive director who says, “Oh, well so and so who manages petty cash, they reconcile it as well. But it’s not really weakness, internal control because I trust them. I would trust them with my baby.” What do you say to them?

Tiffany Couch: I would first say, you know what, it’s so great that you have an employee that you like that. Well that is great because I know how hard it is to find great employees, but when you have them, you want to keep them. But we not only have to keep the nonprofit’s assets safe, we have to keep our employees safe in their jobs and as much as they are trusted, we’ve got to manage both of those sides. Right? And so, here’s some things I might recommend that somebody else reconcile that cash account if she’s administering the payments. I always try to lead with, “I agree it’s really great, but here’s the things that you need to think about in terms of your risk.” And understanding that we really do have to keep our assets safe. That’s actually written down for nonprofit board members. That is part of their job and for the executive directors. But I also say we’ve got to keep those employees safe in their job because we never know when that pressure, maybe they’ve got a sick baby or they’ve got a parent they’re taking care of, or they can’t pay the mortgage or whatever it is. We don’t ever want that pressure to turn into them deciding to take our money.

Dolph Goldenburg: You also have one really powerful question that you talk about in the book a couple of times that you like to ask the person who really feels like it’s a violation of their honesty and trust to have an internal control put in place, and what’s that question?

Tiffany Couch: Oh yes. I know exactly where you’re going with that. When I am approached by either a client or one of their staff members and they say, “How dare you want to put a control over me,” or how a new process, “What’s wrong with you that you don’t trust me?” I always ask that staff member, “If $5 is missing or $5,000 is missing in this organization, where do all the roads lead? Right.” And that person will usually look at me, and the blood will drain from their face and they’ll say, “Oh my gosh, if there was $5,000 or $5 missing in this organization, all roads point to me, and there would be no way to prove otherwise.” And so usually you talk to people in that regard, they will literally start passing off, you know, job duties to other people to keep themselves safe. And I can usually tell if I have an ego problem by asking that that question. Whereas somebody either has a bigger ego problem or more likely there’s a problem with fraud, they’ll just continue to dig in with me. What’s wrong with you that you don’t trust me and how dare you try and put controls over me? And it’s just a mechanism to keep people away and keep people from asking questions.

Dolph Goldenburg: Yeah. Let’s talk about just a couple of the more common types of fraud. I know in the book you talk about skimming schemes. What are those? Can you tell us a skimming scheme story?

We really need to keep the organizational assets and employees safe. That is part of the job description for a board member or an executive director.

Tiffany Couch: I’ve got a great skimming scheme store. I’ve got one for a nonprofit and it’s terrible and it’s really interesting all at the same time. It involves a church, and it involves a priest who was stealing from the church. Talk about the most trusted person in the organization. Skimming basically means your money is coming into your organization, whether by check, whether by cash, whether it by credit card, and it never makes it to the bank because somebody diverts it and puts it into their pocket before it makes it to the bank. And nonprofits are especially at risk for skimming schemes because most nonprofits don’t have accounts receivable, right? We are relying on donations to come in. We don’t necessarily build for, for goods and services. Sometimes we do, but not always. So, you are especially at risk for these schemes cause we never know when somebody that the goodness of their heart are going to donate to us.

In this regard, this priest was stealing. He was stealing money out of the offering plate. I could prove that it was happening. I couldn’t prove the amount, but we could see that on the Sundays when he wasn’t there, donations went up exponentially. But the other thing he was doing when folks were coming into the church for their marriage or their baptism or what have you, they would always have to meet with the priests to, you know, talk about the ceremony and what was gonna happen. And they had to pay a fee for the use of the church, and he would encourage them to pay him the fee. And he was taking all of that money. So, all of these baptisms and weddings were happening, and there was no income on the books. And one of the ways I was able to prove out that case was they had a census book at the Church for all of those ceremonies.  I was able to prove how many people had been baptized and or married at the church during this period of time, and we were able to quantify the loss related to that skimming scheme.

Dolph Goldenburg: One of the other mysteries, also kind of a skimming scheme, not kind of also a skimming scheme, that you solved and you talk about in the book is the bookkeeper at the private school, and how for five years there were no cash deposits made even though in schools, field trip, money, lunch money, all of that is done with cash.

Tiffany Couch: Thank you for reminding me of that story. It’s a small nonprofit K-8 private school. And the way that they uncovered a problem was the IRS showed up and said, “Hey, you haven’t been paying your payroll taxes,” and let me just tell your friends here. It takes a long time for the IRS to call you because they’re sending you notices for years if you’re not paying your payroll taxes. And they just wanted to identify what was going on and I was able to look at their bank statements and I said, “Where’s all the cash? There’s only checks being deposited,” and you made a very good point there. Number one, we had a lot of tuition, payers and cash. It was that demographic of people and there was no cash, no simple, here’s how many students, we have times that amount of tuition equals our revenue. Nobody had done a simple calculation and compared that to the bank statements. Had they done that, they would have uncovered the biggest part of the fraud. But then when you go down to the milk money, the lunch money, the fundraiser money, the band trip money, most of us have had children or been children. How much money do you take to school over time? And none of that cash had been deposited to the bank in years.

Dolph Goldenburg: And you made a point of saying there was a CPA on the board. The organization got audited every year, and just having a CPA and just getting it on. It’s not a sufficient quote unquote internal control cause it’s not an internal control. And you made a point of saying that.

Tiffany Couch: Yeah, only 4% of frauds are found by the external auditors. So, a clean audit just means that your financial statements are reasonably stated. They have nothing to do with saying there is no fraud happening here. And that’s a huge misnomer. A lot of people think, “Well I’ve got a clean audit, there’s no fraud here.” And that’s unfortunately not necessarily the truth.

Dolph Goldenburg: And it also probably means a clean audit if frauds going on means you have a fraudster who’s figured out how to commit fraud while still having a clean audit.

Tiffany Couch: Well correct. And they’re usually the ones dealing with the auditors. So, the auditors are believing what they say. They’re relying on the documents that the fraudsters giving them. We just had a case last week where the woman pled guilty. She was not only a clean audit if it’s nonprofit, the fraud was literally on the front pages of the bank statements cause she was just using the debit card to pay all her expenses. But they had a clean audit every year. And I could see that when the auditor would ask questions, this woman would have the best explanations. And the auditor say, thank you very much and then go on with their day or with whatever they had to do next and never really look into it.

Basic: Two people should open the mail together and route checks to the bookkeeper and cash to the bank. The account sheet is routed away from the person who takes the money to the bank.

Dolph Goldenburg: And you talk about this and it’s also because of the external pressures auditors have. So, you know the auditors firm is saying, “Okay, you got two and a half days for fieldwork. We need to get everything done.” They’re trying to check the boxes. Okay, we got this, we got this, we got the explanation. Okay, we’re good.

Tiffany Couch: Correct. Especially with a nonprofit audit, you’re probably bound by a pretty tight budget. You’re going to be bound by a pretty tight schedule because you’ve got to go from one client to the next, and your resources can tend to be limited, and when you get a plausible explanation, we’re humans, we’re much more likely to believe what somebody tells us, especially when they’re nice and likable and trustworthy than we are to say, “I need that external piece of information to verify what you’re telling me is true.”

Dolph Goldenburg: I will say I felt pretty good when I read your number one recommendation because it’s something I’ve been saying to nonprofits throughout. I’ve been consulting for the last five years, but I’ve been saying for the last five years to every nonprofit whenever we are having conversations about their finance committee is, pardon my French, review the damn bank statement! Review it, review it, review it.

Tiffany Couch: When I was on the phone with this nonprofit client person that became my client, she was the executive director. She’s a new executive director and gets me onto the online banking. While she is talking to me about what’s going on,  I’m looking at the bank statements, and I look at the front page of the bank statement and find fraud within literally five minutes, right? I find this woman was paying for home mortgage and her utilities through the company’s account or the nonprofit’s accounts. And when I said, “Who reviews your bank statements?” She said, “Well, I’m assuming the bookkeeper. And we just give them right back to her.” And a lot of folks don’t even realize that that one basic step, and I am so proud of you, I am so excited that is part of what you counsel people. That one basic step of looking at your bank statements and cancelled check images, 75% more of your fraud risk is going to be uncovered right there because it’s going to show you your deposits, right? Did your money make it to the bank? And number two, how is your money getting spent? Is it getting spent fraudulently or is it getting just miss spent spending on stuff that we don’t need or don’t want or it’s just you know, recurring and we don’t even realize it’s still there?

Dolph Goldenburg: I got to jump in real quick because you know also nowadays banks do not routinely give you copies of your canceled checks and your bank statements. It’s something you have to request and it’s also something you often have to pay for. When I was a staff member in an organization, I was told by someone in finance, “Oh well the bank won’t give us copies of our cancel checks, you know, on the statement.” I’m like, you need to call them and find out how much it costs. I promise you they will. It might cost 25 bucks a month, and it’s worth it.

Tiffany Couch: It’s worth it in the reason I say the review the paper. I know it’s not green or maybe politically correct or however you wanna describe it. The online banking is great for checking your balance, um, and reconciling your bank account. It’s great for that. But most of us don’t have time to load every single one of those images and look at it. Whereas when we get it in paper, we can review it much more quickly. You know in a 10-15-minute time span for most organization, and it’s going to be much more efficient use of our time. And depending on how large your nonprofit is, I would say, you know what we do a lot of business with you. Can you please waive that fee. Otherwise, pay the fee. It’s a great little insurance policies, especially if you implement that process. Make sure that somebody who is not involved with signing checks or taking money to the bank is reviewing those statements every single month.

Dolph Goldenburg: Back when I was an executive director, not only did I review the bank statements (and I would initial each page and data to show that I’d reviewed it), but at the monthly finance committee meetings, I would also hand it to the treasurer and say, “I need you to review this. Ask me any questions if you don’t understand something, and I need you to initial and date each page,” because I just, I really believe there’s got to be accountability on that, and you can actually see whether or not your internal controls to some level are being followed. If you have a procedure that says any check over 2,500 requires two signatures. When you get the copies of the checks, you can see, oh look so and so signed a check to themselves. Okay, let’s ask why they signed a check to themselves

Tiffany Couch: Or what’s missing? Like why don’t I see any payroll taxes being deducted? That was a big one in that the payroll taxes are a big one, right? Because I can go only so long and not pay rent or pay the utilities, stuff’s going to start getting shut down, but I can go a long time and not pay payroll taxes. And so, you know, in this nonprofit organization, that should have been a clue that every two weeks they’re paying employees. Why aren’t the payroll taxes being deducted at the same time?

Q: How can you not trust me?
A: If $5 or $5000 is missing in this organization, where do all the roads lead?

Dolph Goldenburg: Just on that. I got to say it, board members really need to understand that if they’re nonprofit fails to pay rent, chances are depending on the laws and everything else in their state stay at, I don’t do legal tax or accounting advice, but chances are the landlord is not going to sue them personally. But if you owe past due payroll taxes, the IRS is coming after you as a board member. They’re saying you have a responsibility.

Tiffany Couch: There are fiduciary duties that you have as a board member, and it’s written right into the IRS code.  A lot of folks who are just some of the nicest people in the planet are on these nonprofit boards, right? And they just want to give back to their community, or they love the mission of the nonprofit, but they don’t truly understand some of those fiduciary responsibilities.  What I find is that as smart as they are in their respective roles and their jobs or in their community or in their families, they don’t feel comfortable with the numbers. So, they don’t always ask questions, or they don’t want to feel stupid or they don’t really know. And so, sometimes I think things just go by the wayside out of fear of being embarrassed or feeling stupid. And I want to empower people to say, “Listen, numbers don’t make sense to everybody. That’s okay. Here’s how to understand them. Here are the things you can do that are very easy, good questions to ask, good processes to have that empower you as a board member and help you maintain your duties as a board member.”

Dolph Goldenburg: Absolutely. Now, let’s also talk about corporate credit cards because you know, as nonprofits become more corporate, it’s not at all unusual, even in smaller ones, 30-person organizations to see five people with credit cards. What types of fraud should nonprofits be on the lookout for and how do they stop it?

Tiffany Couch: So, the first thing, if you’re going to have a corporate credit card, then the first thing I want you to do is work with your bank to identify those company codes or certain industries where you cannot spend money, for example, a gentleman’s club, right? You would just not be able to swipe your credit card. And so, the credit card companies are able to identify for you maybe you don’t want to have any restaurants or anything at Amazon. You can actually lock down those cards for where you don’t want the money to be spent. I want you to do that first. And then if those cards are being used, then somebody who is not also managing those cards, somebody who’s not using those cards should review those, those statements every month. And I know that takes time.

Tiffany Couch: I believe that story’s in the book where this up and coming executive director, just this amazing woman accomplished an under 40. She was doing great things in the community. Great things for this nonprofit as their executive director, and those guys, those nonprofit board members are signing those checks every month for a credit card. But nobody ever asked to look at the statement and had they done that, they would see her trips to Victoria Secret. They would see her trips to Las Vegas. They would see her trips to the spa, none of which had anything to do with the nonprofit. It sounds so simple and so basic, but it truly is. If she had known that they’re looking every month, what are the chances she’s going to misuse that card? But she knows they’re not looking… She literally bought all of the furniture for her brand new house off of that card in one month and they just signed the check, and nobody ever looked at the statement.

Dolph Goldenburg: And I’m so glad you said that because it is incumbent on the board chair or the treasurer, if your executive director has a credit card to say, we want to see the credit card statement an we also want to see the receipts, and we need itemized receipt so it can’t be, you know, you like oh dined out and it’s, you know, the total with the tip. It needs to be itemized receipts, and whatever board member reviews. It has to be comfortable saying, “Can you explain this to me?” Might be a reasonable explanation, but has to be comfortable asking for one.

Tiffany Couch: Even if you’re uncomfortable asking for it, ask for it anyway because that’s your job, and those itemized receipts are so important. And go through them and ask questions. And even if you know the answer, when you ask those questions, they know you’re looking. Those itemized receipts. It’s surprising what you’ll see go through there. And a lot of nonprofits have a no alcohol policy, right? So if you get the tab with just the total and the tip, that’s not going to show you what they ordered. Whereas the itemized bill might show a $50 bottle of wine with the $20 dinner, you know, so we wanna make sure that those receipts are attached to those statements every month.

Basic: Nobody should sign a check to themselves.

Dolph Goldenburg: So now let’s talk about expense reimbursement request, another big area for fraud.

Tiffany Couch: Easy. I call that the low hanging fruit because that’s where I look first because it’s just the place where people test their ability to take advantage.

Dolph Goldenburg: Say more about that.

Tiffany Couch: The issue expense reimbursement is one of those places where, you know what? It’s really in the honor system, right? I’m going out, I’m taking a trip. I have to fly out to the east coast. I’m going to have a plane ticket, a hotel receipt and meal expenses.  I might have some transportation, so I’m going to have all of those things that go along with travel, and my company, that nonprofit is relying on me to adhere to their standards. They’re wanting to make sure I don’t take a first-class ticket or that I stay in a reasonably priced hotel and that I’m not downing everything in the mini bar. And so, those are places where employees who may have a different set of rules in their mind, they might say, you know what, I’m working really hard. I should be able to drink whatever I want out of the Minibar, or I should be able to go to the spa and have that massage when I’m out of my meetings, whatever that looks like. We want to make sure that folks aren’t doing that. So those itemized receipts should come with every single one of those expense reimbursement forms, and somebody must review them there. I believe the case is in my book, it’s a $1.4 million sounds outrageous a $1.4 million of an expense reimbursement scheme from this person who was not only doing all of that personal on the company dime, but also just putting in fake receipts on his expense reimbursements and getting reimbursed for things that never happen. Review, review, review,

Dolph Goldenburg: Tiffany, you might also think I’m stingy when about to say the story. I’m a big fan on things like expense reimbursements and credit cards of really setting the threshold of “That’s not okay,” at a point where a lot of things are just not okay because I think it sets a standard and expectation. One place where I was interim, I reviewed someone’s expense reimbursement request and they were going on an out-of-town conference going to an out of town conference. And I know what part of town this person lives in. They walked out their door and went to the Starbucks next door to their home on their way to the airport and picked up like a $7 coffee. And I’m like, isn’t this right on the same block as where you live? And the person says, “Well, yeah, but it all falls within my per diem.” And I’m like, when you come to work in the morning, if you stop at the Starbucks, we don’t pay for your coffee. Why would we pay for your coffee on the way to the airport? To me, like when you do things like that, then you kind of set this expectation of we’re going to carefully look at this. And if it’s not allowable, it’s not allowable.

Tiffany Couch: I love that. One of the worst expense reimbursement, I hear it all the time. Well, we don’t do any receipts for $20 or under. Well, okay, well then I can go have a really great time. Right? I can just go all day long at $20 or under, it’s at the Starbucks every day or whatever. And so I’m a big proponent of every receipt for every transaction. Yes, I realize that there are going to be times when something gets lost or we forget to make sure they print it out. I get that. But we had must set the policy and set the tone and at any sort of questionable items must be reimbursed back, taken out of the paycheck or what have you because you’ve got to sit down

Dolph Goldenburg: So we are rapidly running out of time. Definitely. I knew this would happen because I knew that I would love talking to you. So let’s talk about a few of the internal controls that really every nonprofit should have. We’ve already talked about the checking account statement and making sure that you’ve got that. What are some of the other just core basic internal controls that would stop the vast majority of fraud?

Skimming = money comes into the organization but never makes it to the bank. It gets diverted into the pocket of an employee, volunteer, or board member.

Tiffany Couch: A big one for this nonprofit we just got done with was they had this person have a mail long for all the money that comes in the mail, and then they just put the money in a drawer, and then somebody would take it to the bank later. I want to make sure that at least two people are opening the mail and writing down all of the money that comes in the mail.

Dolph Goldenburg: When you say to people that are opening the mail, do you mean they’re doing it together? They alternate days? What do you mean?

Tiffany Couch: Oh No, doing it together? That’s a great question because a lot less likely to have collusion, right? So, it’s a bit of a drain of a resource, but we can easily, you know, 2030 minutes a day, let’s open the mail and figure out where it needs to be routed and for those checks that come in, we fill out the count sheet and we route the count sheet to the accountant or the bookkeeper or the treasurer or whoever is doing the accounting. That gets routed to that person, and one of those two people usually can bundle that money up and take it to the bank. That way when the accountant is reconciling the bank, we could verify that what came in the mail or what came through the fundraiser or whatever. We have those two people counted. We have the count sheet. It matches what made it to the bank.

Dolph Goldenburg: Once the account and reconciles the cash and check log with the actual deposits that went into the bank. Should somebody else verify the reconciliationn or are we just good once the accountant has done it?

Tiffany Couch: I always am going to assume that that reconciled somebody is double checking the reconciliation as well. We don’t want old uncleared checks or old deposits in transit. You really should see that everything on that reconciliation is pretty current and we don’t have any old stuff out there. The biggest one for nonprofits is if you were at a fundraiser, you getting money in the mail back sort of thing, especially when you have no accounts receivable, that you’ve got two people that are counting that money and that that count sheet gets routed away from the person who gets to take the money to the bank cause I don’t want that count sheet either thrown away or manipulated so that we can hide any sort of cash skimming. If you are the person that is setting up or entering a vendor bills and preparing the checks, somebody else’s signing those checks. Very basic, but it’s a great internal control. And then that second step is reconciling the bank statement and cancelled checks.

Dolph Goldenburg: How do you feel about the ability for somebody to sign a check to themselves?

Tiffany Couch: Oh, nobody should ever be able to sign a check that is for them. Whether it’s a payroll check or whether it’s a reimbursement check. No, no, no. It’s just going to raise questions that don’t need to be had. And let’s face it, you can wait an extra few hours or to the next day or two to get a board member in there to sign that check. That’s not that of a rush. If you have traditional accounts receivable where you are billing for goods or services, if you have somebody doing the billing, I don’t want that person also taking the money to the bank. Let’s separate those two duties to make sure that we don’t have an ability for somebody to manipulate the accounting system for money that they’ve stolen.

Basic: Review payroll reports after payroll has been run.

Payroll is big. In terms of payroll, we’ve had several of these cases where my clients approve payroll. They know what the timecards day or they know what salaries are. They approve payroll. Payroll gets processed, and that person has either called in more hours for themselves, called themselves in for more time, called themselves in for a higher salary, and they effectively pay themselves more. So, I want to make sure, just like those bank statements, just like those credit card statements that you’re reviewing payroll reports after payroll has been run. The good news for your listeners, it doesn’t take more money to have basic but really strong internal controls, right? We can, we can really segregate duties or use some of our volunteers or our board to help shore up and keep those assets safe in our employees and our volunteers safe in their jobs.

Dolph Goldenburg: So, there is one internal control that I have never actually thought about and I love. And so, the internal control is the person that is responsible for entering the accounts payable and actually cutting the check cannot be the person that enters new vendors into the accounting system. Because otherwise if it’s the same person, they could create their own fictitious entity or even a real entity, a legal entity that could be checked and write checks to themselves to that entity.

Tiffany Couch: It’s not like the top of the list, right? But it’s a great internal control because in new vendor should be a real vendor. And one of those frauds that I see is that people go and created an entity, write checks to the entity because it’s much easier to write checks to an entity and than to myself. They’re basically writing checks to themselves, and we want to make sure that they can’t do that.

Dolph Goldenburg: Amen. Amen. Now I’ve already said we’re rapidly running out of time and, and it’s, and it’s waning even more now. So I’ve got to run over to the Off-the-Map Question. By the way, listeners, we’ve probably only covered a 10th of what’s in this book. And again, Tiffany does it all with stories.  I don’t want to cover too much of the book cause I don’t want you to feel like you shouldn’t get it. Every listener needs to go on Amazon and get a copy of this book. They just really should. But we’re going to move over to the, Off -the-Map question. Do you have any, I don’t know if you’re aware of, but we do an off the map question. It’s really a no way related to what we just talked about, but it helps listeners get to know you as a person. I learned something about you that I would not expect a forensic accountant to have been. Tell me about the time when you were crowned the Ms. Cotton Queen in your home town in California where I don’t even think they grow cotton in California. Tell me about this.

Tiffany Couch: We do. That’s the big misnomer. Everybody says, oh, you’re from California. But I grew up in the Central Valley. If you’re wearing a cotton shirt today, it’s more than been grown in my hometown. And very big cotton farming, lots of dairy cows. But cotton is the big thing in my hometown. And every year they crown the cotton queen for the Cotton Festival because we harvest cotton in the fall and usually it’s a high school student.  So you go around and give speeches and sell tickets and, and I think do an interview. And so I won the 1991, won queen. I have a crown. I have a Tiara. I’ve got the sash. Uh, I learned the wave and I not only got to be the crown person at our cotton festival event and got to travel around to the various towns and all of their other little festivals that year

and it was fun.

Dolph Goldenburg: It is 100% okay to tell me no, but I would love, love, love to post a picture of you with your crown and your sash either then or now in the show notes. I’m fine if it’s then or now, but I would adore this.

Tiffany Couch: We can do it. We can do it. That’ll be fun. I should do it now because I think that’ll just embarrass my teenage boys, and I would love to do that.

Dolph Goldenburg: Awesome! I love it. I so I will make sure we get that photo and we get it on the show notes. One more good reason for listeners to check out the show notes. Tiffany, I just have to say thank you for writing this book. I know you talk about both the for-profit and the nonprofit sector, and I’m sure this is a need in the for-profit sector too, but there is a dire, real need for your book in the nonprofit sector. Thank you for writing it. Thank you for coming on the show today. I am confident that our listeners that did not switch to another podcast as soon as I said accountant. Yes, we know who those listeners are. We don’t really, but I’d like to think we know who those listeners are. Those that did not switch got a lot out of this.

Dolph Goldenburg: Just a couple of things real quick listeners, make sure you pick up a copy of this book. It is The Thief in Your Company by Tiffany couch. I actually thought about offering to give away my copy, but it is so dogeared and so underlined, and what I’ve underlined might not be what you as listeners need.

So, here’s the deal I’m going to make. The first person that goes on and writes a review of the podcast, and you got to email me and tell me you did it, and I will verify it because we don’t like fraud and so once I verify that you’ve written the review, I will go on Amazon and have a copy of the book delivered to the address of your choice so it’s only one. It’s not a huge risk for me. I’m hoping someone takes me up on it.

Expense reimbursement requests are the low-hanging fruit of fraud. People will test their ability to take advantage here.

Now, some other things I’d like for listeners to consider. First of all, go to www.acuityforensics.com,  which is Tiffany’s firm, and after you’ve finished checking out her firm, go to www.stopnonprofitfraud.com. There’s a ton, I mean a ton of free information both at acuity forensics and also it stopped nonprofit fraud, but one of the most exciting things about www.stopnonprofitfraud.com is that they have created an E-course to help nonprofit executives and board members recognize and stop fraud as well as put some of these internal controls in place that will ensure fraud does not happen. Now, Tiffany has generously offered a discount code for our listeners. So, we’re also going to put that in our show notes. So, if you want it for a little bit less, and I have to say when I checked, I don’t think it’s that much. It’s like what, 200 bucks, something like that.

Tiffany Couch: I think we have it down to $99 right now. I think the coupon code is going to be off of that, which is pretty exciting.

Dolph Goldenburg: I have to say that is dirt cheap for really incredible continuing education. And if it’s anything as good at this book, it’s worth every single penny. So again, do not forget if you are not the first person to write a review, and I do not buy a copy of this book for you, Go on Amazon or walk into a bookstore and buy The Thief in Your Company by Tiffany couch. Hey Tiffany. Thank you. This has been amazing. I loved your book.

Tiffany Couch: Thank you so much. I really, really appreciate being here and being able to talk to all your listeners.

Dolph Goldenburg: If you’ve been scrambling to review your nonprofits accounting records with a fine-tooth comb, mock hearing, these sorts of tales of fraud and embezzlement, don’t stop. Keep that up. All the information that you’re going to need from today’s show is on our homepage www.successfulnonprofits.com. That is our show for this week. I hope you have gained some insight to help your nonprofit thrive in a competitive environment.


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