CFO takes EVERYTHING from Koss

her defense: Insanity

[jsinger]

Koss, the publicly owned headphones company has modest revenues of about $45 million a year. Still their CFO managed to loot the company for about $31.5 million.

Her defense? Insanity in the form of compulsive shopping. She earned nearly 200k and her husband was a doctor. In some cases she would leave her extravagant purchases with the seller because she didn't have room at home or in her storage room. 461 shoes, 32 fur coats!

" How a VP got away with this lavish shopping spree is beyond comprehension."

Neither the company nor its blue chip auditors detected the embezzlement. American Express contacted Koss when they wondered why millions in card purchases were paid by Koss wire transfers!

[businessinsider.com...]

[jecasc]

Then where is the other penny....
You naughty person.

Came immediately to my mind.

[youtube.com...]

Neither the company nor its blue chip auditors detected the embezzlement.

Probably because the auditors did not much auditing in the first place. The audit probably consisted of writing a large bill and collecting a large cheque. Just like most tax consultants charge absurd amounts of money for hitting the print button in the accounting software to print out the balance after you made all the necessary book entries.

That's why I do not have a tax consultant by the way, but spend 20 EUR on a book to keep me up to date on the necessary changes in tax law every year. And so far there have been no complaints on any tax audit by the taxman.

Which makes me wonder: I only have a yearly turnover of roughly a million and the taxman comes every six or seven years to check my books. Actually an auditor was here only a few weeks ago and sat in my office for two whole days going over my bills and accounts. Was there never a tax audit in this company and did nobody ask why there was a $225,000 expenditure for jewelry?

[LifeinAsia]

Any company doing $45 million/year in sales (especially a public company) should have at least one accountant who would have questioned the expenses.

Also, the value in a good tax preparer is not just making sure you're not doing anything wrong (like claiming deductions that you shouldn't), but also making sure you're doing things right (like claiming all the deductions that you ARE entitled to).

And so far there have been no complaints on any tax audit by the taxman.

An auditor will almost never complain that you missed some deductions to which you were entitled. :)

[Demaestro]

Neither the company nor its blue chip auditors detected the embezzlement.

How grossly sad. jesasc is right, my wife is an accountant and any good accountant that is actually DOING their job would notice 65% of a company's annual revenue missing.

Pretty bad that someone has so little morals they could steal like that but it isn't much better of a moral position to be collecting a paycheck and probibly bonuses when you aren't really doing your job.

[StoutFiles]

I couldn't find an article that talks about the husband. Wouldn't he be semi-responsible? There's no way he wouldn't realize that his wife was spending that much money without some knowledge of what was going on.

[jsinger]

A smaller company protects themselves from fraud like this by taking a few very simple/quick measures:

1) Not delegating signing of checks to the bookkeeper. Even with a large company like Koss, owner/CEO's signature should be required on checks over say $1,000, or certainly $10,000.

2) Owner (not bookkeeper) opens and scans bank statements. That would pick up forgeries or those huge wire transfers

3) Main disbursement account/accounts should keep minimal cash. If cash builds, then owner transfers cash into investment account that only the owner can access. If cash runs low, only owner can draw more from investment account (and he should be wondering why cash is low)

4) Owner occasionally opens all incoming mail. That's a smart idea on many levels, not just accounting. But reading mail would show the firm isn't getting past due notices on bills that should have been paid.