The new North-west. [volume] (Deer Lodge, Mont.) 1869-1897, 1888-03-09
A CLASS OF DETECTIVES OF WHICH
THE PUBLIC KNOW LITTLE.


THE PUBLIC KNOW LITTLE.
Professionalism Hidden Frauds Are
Detected-Impossible for q Dishonest
Bookkeeper to Cover All Traces.
Murder isn't half SO sure to come out as is
fraud in financial transactions. There is q
comparatively small but exceedingly indus
trious and shrewd class of men whose
business it is to run down such frauds. 1t is
the class Of SO called expert accountants A
better name for them would be business ex-
aminers. In such cases as the recent Ives
collapse the whole responsibility of arriving
at the absolute condition of affairs often rests
with one or moro of these accountants On
their investigations is based the whole action
in much important litigation. They have
framed the motto of the famous detectives,
1--WE never Sleep" to the more cogent phrase,
1--WE never fail"
An old accountant, one who has been il,
the business thirty years, recently gave ME
some interesting facts. One of tho things
about the discovery of fraudulent money
transactions, such as embezzlemepts and
forgeries by trusted employees. that strikes
the unbusiness mind as peculiar, is that the
swindler, himself having exclusive charge of
the books and being adroit enough to steal
for considerable time and at the same time
conceal evidence of his thefts OH the books,
should leave on them patent, to the expert, a
record of his crime.
"Why does he not destroy all evidence of
the fraud, SO that, when be is gone, it will be
as undiscoverable as it was while he con.
Quoted the swindle?" asked the veteran ex-
pert, "Can he remove all trace of his criminal
operations!"
"No," said the accountant; "it is absolutely
impossible for dishonest bookkeeper, for in
stance, and his opportunities are by far the
best, to SO cover up his thefts that an expert
cannot discover them. That is, unless all the
books and papers are destroyed, which is
proof positive of fraud on its face"
"Well, why is that true?"
ITO answer that question I must give YOU
an idea of the whole business of expert ac-
counting. It is not difficult to comprehend,
but very difficult and very tedious to do some
times. In the first place, there are only two
methods of stealing: Method No. l, abstract
ing goods or monsy without record; No. Q,
doing the same with record and falsifying the
accounts by failing to acknowledge moneys
received for goods sold or for stocks, OF other
wise. Let us take this case No. 2 first. The
accountant being convinced that the accounts
are falsifed or balance forced that is,
made to appear where there is none, proceeds
in this way:
"He first compares the cash on hand at the
time of the examination with the balance
shown on the books. If this balance is cor
rect, the next step is to trace specimen entries
IF rEc euhio of
course, are never destroyed. For example,
it certain cashier receives from debtor
check for $500 and no entry is found on the
cash book, by applying to the debtor the ex-
pert finds whether the debtor received re-
turned $500 check indorsed by the defaulter
OIL the day when the swindle is supposed to
have taken place. An affirmative answer
from the creditor is, of course, a sure clew.
But if the books have been kept so that the
cash is right to all appearances 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 cop
les Of bills retained, nor entries of them put
down. He at once compares the original
shipping receipt books with the original entry
of sales, or checks them off, as we call it.
Here again, of course, if there is any dis
erepancy or omission, we have positive proof
Of sharp practice.
"Swindllng method No. ], by receiving
cash and keeping no entry at all, is generally
practiced by bunglers, or men who become
dishonest through force of circumstances.
Nearly always such frauds are revealed in one
or two ways; either by means of false ad
litions or by supplying fictitious accounts.
False additions, of course, are easily dis
covered Where fictitious accounts are used
the expert often has great difficulty in u1-
raveling them. For instance, frequently
have found OH ledgers the names of fictitious
firms credited with money aud charged with
small amounts of goods, whereas the actual
shipments were to some bona fide firm and
for much larger amounts. In this case the
expert can only find out by extensive letter
writing to whom goods We're shipped OH that
date. The firms can tell, of course, by their
books, whether they received goods of the
sort in controversy about the time of the fc-
titious shipments. Sometimes, however, it
involves an almost endless amount OF inquiry,
running through all sorts Of complicated dis
honesty, to get the whole skein of such frauds
III hand But exposure is inevitable sooner
or LATER The swindler can falsify his trial
balance SO that to a casual observer the books
will appear straight. But he cannot so falsify
all the books, vouchers and cash records in
volved as to ultimately elude the detective |
ability of an expert accountant"
"How long does it ordinarily take to
straighten out books where there is a fraud!'
"Tbat depends altogether on the shrewdness
with which the fraud has been perpetratetl
Some accounts can bestraightened out in two
weeks. Others take many months. have
worked nine months on tangled set of ac-
counts. The work always involves an i'm
,nense amount OF reference It is necessary
in many cases to 80 through several years OF
bookkeeping item by item. Great numbers
of letters must he written. Banks must be
called on for the records of checks and
drafts Incidentally, features requiring ell
tirely different procedure than any the ex-
pert has before met will arise. Then, besides
tie tedious examination of the books, he
must resort to new and ingenious devices.
This is what lends zest to his researches."-
New York Commercial Advertiser.