The examiner. (Hartford, Conn.) 1881-188?, 1888-03-03
STRENGTHENING BOOKS.
The Mode of Working Adopted by
Expert Accountants.
Different Ways of Unearthing Frauds
The Two Principle Methods of Fall
styling Accounts-Clumsy and
Clever Ways of Stealing.

ploye" and his subsequent flight to Can
ada. The first thing employers do, OF
course, is to make report to the
police of the fact of the flight Of
their employe and ask them to 'shunt the
rascal down. This much done, what
next? Why, "How do we stano@
aWhat's the amount of loss? sWbat do
the boo ks showsn szz=-.ss
Not one employer in five hundred, says
the New York telegram, can answer these
questi ons, because he knows little or moth
ing of book keeping. If any of the other
clerks of the swindled firm are able to as
certain the facts, and in most cases they
are not, they would not be trusted to do
SO. There might have been completely
and collusion between the absconder and
them. What then? Why, the expert ac-
countant is called in and the books turned
over to him. There are about one hundred
of these men of the highest class who
have their headquarters in this city.
One of this small fraternity of expert
accountants, who has been in the business
for over quarter of a century, recently
gave reporter little insight into the
mys teries of his craft, supplemented by
personal experiences.
s'One of the things about the discovery
of fraudulent money transactions said
this book keeping detective, "such as EN-.
ployes, that strikes the unblsiness- like
mind as peculiar, is that the swindler, al
though having exclusive charge Of the
books, and being adroit enough to steal
for a considerable period, and at the same
time conceal evidence of his thefts on the
books, should leave on them a record Of
his crime patent to the expert accountant.
But the answer to this is that it is an i'm
possibility for dishonest book-keeper =
f,s- g., ha1
Ito SO cover up his tracks that an expert
can not discover them-that is, unless the
books and papers are destroyed, which is
pro of positive of fraud on its face.
"In the first place there are only two
methods OF stealing. Method No. lab
stracting goods or money without record;
No. 2-doing the same with record and
falsifying the accounts by failing to ac-
knowledge money received for stocks,
merchandise, etc. Let us look at method
No. first. The accountant having
satisfied himself that the accounts are
faIsified OF a balance 'forced'-.hat is,
made to appear where there is none-pro-
ceeds IN this way:
t.He first compares the cash on hand at
the time of the examination with the
balance shown on the books. II the bal
ance is correct, the next step is to trace
spec linen entries by means Of returned
checks. For example,: IL a certain
cashier receives from debtor check for
81, 600 and no entry is found on the cash
book, by applying to the debtor the ex-
pert finds whether the debtor re-
ceived returned 81, COO check indorsed
by the defaulter on the day when the
crooked work is supposed to have taken
place. An affirmative answer from the
creditor is, of course, a sure clew. But il
the books have been kept so that 10 all
appearances the cash is right, and yet the
accountant finds that some defalcation
must exist because of the difference shown
by the trial balance, he very frequently
discovers that shipments have been made,
and no copies of bills retained nor entries
of them put down. He at once compares
the original shipping receipt books with
original entry of sales, or checks them
off, as it is called. Here again, of
course, if there is any discrepancy or
omission, we have positive proof of crook
edness.
tsSwindling meth cd No. 1-by receiving
cash and keeping no entry at alI--is gen.
orally practiced by bung eers and novices
who become dishonest through forcs of
circumstances. Such frauds can nearly
always be discovered in one of two
ways; either by means of false additions
or by suppl ying fictitious accoun is.
False additions, Of course, are very easy
to discover. Where fictitious accounts
are employed the expert often has great
difficulty in unrayeling them. For in
stance, l frequently have found on ledgers
the names of fictitious firms credited with
m oney and charged with small bills of
goods, where the actual shipments were
to some bona fde firm, and for much
larger amounts. In this case the expert
can only find out by extensive letter
writing to whom goods were shipped on
certain date. The firms can tell, of course.
by their books, whether they received
goods Of the sort in controversy about the
time of the fictitious shipment. Some
times, however, it involves an endless
amount Of inquiry. running through all
kinds Of clever and complicated dishon.
esty, to get the whole skein of such frauds
in hand. But exposure is inevi! able,
SO oner OF later. The swindler can falsify
his trial balance SO that to a casual OBJ
server the books will appear correct, but
he can not by any possibility so falsify
all the books. vouchers and cash accounts
and records involved as to ultimately
elude the detective ability Of an exper
accountant.
ssAs to the length of time it takes to
straighten out books that have been doc
tored depends altogether, or in great
part, upon the shrewdness with which
Cn6 fraud mas Deen perpetrated. 0on9
accounts can be Strengthened out in one
or two weeks; others may take months.
I have worked over seven months on one
set OF books before I could bring order
out Of the chaos into which they had been
put. Then, besides the tedious examina-
tion of the books, an expert accountant
must resort to new and ingenious devices.
This is what lends zest to the monotony
of his dry researches.
every often in the examination OF a set
Of books the expert meets some in nterest-
ing features. It is fact that the public
hears Of only a small percentage of the
cases of dishonest dealings. Frauds Oft
en- are covered up for personal, social,
political and other reasons. [ have
worked on as many as eight cases in one
year. and found crooked work in them
all, but in only one case, and that where
the fraud was small and Insignificant, did
The business house use my findings to
prosecute the offender
NOTWITHSTANDING the wildcat market
Is little dull just now, farmer in the
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