Current Events > Wow, just stumbled across MAJOR fraud at my new job.

(+) Yeah! (+)

Posting in possibly (but not likely) soon to be famous topic.
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TC seems to be referencing reverse journal entries of some kind?
seems standard accounting correction
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TommyG663513 posted...

Is this whole topic a copypasta?

Did you really need to ask this
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Bump
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Have you informed the United nations business committee of accounting and finance?

There could be international ramifications here.
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Lol there's like 5 people in this thread that all experienced the same thing. Anyways my personal situation as of now

Today is the start of my second week at my new job (jr staff accountant for a midsized company).

My first week was mostly onboarding, training, etc so I didnt get a chance to dig into the systems side until today.

This morning I came into the office and started playing around in the system and familiarizing myself. It didnt take long before I noticed something was very wrong.

I began looking at the day to day transactions, the individual journal entries, and noticed something very strange - the transactions were listed twice.

I thought this must be an error, a one off thing, but sure enough when I checked every journal entry I found the same thing. If the company purchased something, theyd credit one account, but then at the same they would debit another in that same transaction. This went on for millions upon millions of dollars worth of transactions.

I immediately freaked out when i saw this, obviously. I got up from my desk, went over to my boss, and told him I had to go home ASAP because I was feeling very sick. When I got to the parking lot, I called the companys anonymous misconduct line and reported what I had found.

Now Im home and I dont know wtf to do. Im debating writing an email to the CFO but Im not sure how complicit he is. Obviously Im going to quit tomorrow (dont want to get wrapped up in this and have my career ruined).

Anyone ever been in a similar situation?

Welp
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complex financial crime

call law enforcement, possibly federal, since it involves millions and likely involves interstate commerce.
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Why would it even be documented if they or someone was skimming money ?
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Ain't gonna lie, it's funny being able to spot the people with obviously no accounting knowledge.
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I'm pretty sure this is how Weekend at Bernie's started. You're in for a hilarious few days with your boss and Jonathon Silverman.
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i hate this pot of crappy pasta.
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i can tell you as someone who is involved in accounting that this is not normal and it's good that you called the misconduct line. if nothing happens you can always tell the media
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When in doubt, just keep crediting revenue and debiting accrued liabilities. You cant lose.

Dunder Mifflin?
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RedWhiteBlue posted...

WaterLink posted...

Ain't gonna lie, it's funny being able to spot the people with obviously no accounting knowledge.

As someone with the absolute bare minimum of financial knowledge, what the hell is the point of debiting your credit. Why not just have auto pay from the bank, why a second account for debit?

Bruh the Wikipedia article on double booking is literally in the thread
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DuranOfForcena posted...

omg tc, you're onto something huge here

blow that whistle

https://www.youtube.com/watch?v=UBOjtlaRUpc" data-time="
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RedWhiteBlue posted...

Doe posted...

RedWhiteBlue posted...

WaterLink posted...

Ain't gonna lie, it's funny being able to spot the people with obviously no accounting knowledge.

As someone with the absolute bare minimum of financial knowledge, what the hell is the point of debiting your credit. Why not just have auto pay from the bank, why a second account for debit?

Bruh the Wikipedia article on double booking is literally in the thread

I read it but it didn't cover WHY it was done, just how it was done, and even then I was still very confused. I'm not exactly the brightest person out there.

So you can see where money is coming from and where it's going to in one journal entry.
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So. I'm gonna come clean. I'm a CPA and an external financial statement auditor and I literally see this sort of fraud every single day with nearly all of my clients and I don't do a single thing about it. Sometimes, I'll even propose my own offsetting entries for the clients to make. We actively help clients account for all of their records like this.

I really needed to get that off my chest.
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Gheb posted...

So. I'm gonna come clean. I'm a CPA and an external financial statement auditor and I literally see this sort of fraud every single day with nearly all of my clients and I don't do a single thing about it. Sometimes, I'll even propose my own offsetting entries for the clients to make. We actively help clients account for all of their records like this.

I really needed to get that off my chest.

i'd be cool if you were helping individuals do this.
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WaterLink posted...

Ain't gonna lie, it's funny being able to spot the people with obviously no accounting knowledge.

I admit having zero accounting knowledge.

I'm going to school for physical therapy, it didn't come up.
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RedWhiteBlue posted...

Doe posted...

RedWhiteBlue posted...

WaterLink posted...

Ain't gonna lie, it's funny being able to spot the people with obviously no accounting knowledge.

As someone with the absolute bare minimum of financial knowledge, what the hell is the point of debiting your credit. Why not just have auto pay from the bank, why a second account for debit?

Bruh the Wikipedia article on double booking is literally in the thread

I read it but it didn't cover WHY it was done, just how it was done, and even then I was still very confused. I'm not exactly the brightest person out there.

So you can keep records so if something is off you can go back and see where something went wrong or where potentially a fraud might have occurred. For example if your cash on hand is different than what the books tell you how much you should have, you know either someone fucked up the bookkeeping or someone stole some.
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RedWhiteBlue posted...

Doe posted...

RedWhiteBlue posted...

WaterLink posted...

Ain't gonna lie, it's funny being able to spot the people with obviously no accounting knowledge.

As someone with the absolute bare minimum of financial knowledge, what the hell is the point of debiting your credit. Why not just have auto pay from the bank, why a second account for debit?

Bruh the Wikipedia article on double booking is literally in the thread

I read it but it didn't cover WHY it was done, just how it was done, and even then I was still very confused. I'm not exactly the brightest person out there.

So it is impossible to make any sort of transaction without hitting at least to accounts. Like physics any transaction has an equal an opposite transaction. Double entry accounting tracks how any transaction impacts each affected account.

Starting with the basics, a debit is a positive and a credit is a negative. Assets (cash, receivables, property and investments) are naturally positive numbers. Liabilities (debt and payables) are naturally negative numbers. Likewise revenues are naturally negative and expenses are inherently positive.

So if you for example went and bought a car with cash for $10,000. Your property would increase by $10,000 and your cash would decrease by $10,000. So the entry here would be to debut property for 10k and credit cash for 10k.

Let's say instead you financed the car instead of buying it in cash. For simplicity's sake it's a zero interest no cash down transaction. Property is still increasing by $10k, but instead of cash decreasing your debit is increasing by $10k. So this entry would be $10k debit to property and a $10k credit to debt.

Let's look at this from a income side. You go out to buy ice cream. You pay the shop $5 bucks for a ice cream cone. Cash has decreased by $5 and your ice cream expense increases by $5. So you debit expense by $5 and you credit cash by $5.

It's a little more complicated on the seller's side. You gave him $5 and he then gave ice cream. Let's say that icecream was worth $2 bucks to the ice cream man so he lost $2 of ice cream. In this case he will debit cash for $5. Then he will credit inventory for $2. Now since debits must always equal credits, that means we still need to make a $3 credit to balance. So in this case a credit to revenue for $3 is made, representing the $3 the ice cream man earned.

Hopefully that helps.
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WaterLink posted...

Ain't gonna lie, it's funny being able to spot the people with obviously no accounting knowledge.

Lmao. I had to reread it because I didn't bother to understand it the first time because most TCs troll. After reading the comments and rereading the posts, hilarious.

Doe posted...

RedWhiteBlue posted...

WaterLink posted...

Ain't gonna lie, it's funny being able to spot the people with obviously no accounting knowledge.

As someone with the absolute bare minimum of financial knowledge, what the hell is the point of debiting your credit. Why not just have auto pay from the bank, why a second account for debit?

Bruh the Wikipedia article on double booking is literally in the thread

Easier than that.

You debit cash when you get it.

You credit cash when you lose it. You double book to keep track of income, expensive, etc. Like if you buy something, you get the item, but you lose the money, so you debit inventory and credit cash. So easy.

Credit Cash
Debit Capitalized Ice Cream

Because I put my ice cream in the freezer and eat just small bites every few months or so.

CE_gonna_CE posted...

Credit Cash
Debit Capitalized Ice Cream

Because I put my ice cream in the freezer and eat just small bites every few months or so.

What is the useful life of your ice cream?
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Gheb posted...

CE_gonna_CE posted...

Credit Cash
Debit Capitalized Ice Cream

Because I put my ice cream in the freezer and eat just small bites every few months or so.

What is the useful life of your ice cream?

Never trust a man who records ice cream as a fixed asset
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wow, you mean money is taken from one source then GIVEN to another?! how scandalous
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Gheb posted...

CE_gonna_CE posted...

Credit Cash
Debit Capitalized Ice Cream

Because I put my ice cream in the freezer and eat just small bites every few months or so.

What is the useful life of your ice cream?

Technically, infinite, since the enjoyment I get from it lasts forever.

Capitalized Ice Cream just rolls up into Goodwill when corporate consolidates everything, so its all good.