Recently I had to audit a small establishment. No…not in the course of my work. I am not a CA. But due to a moral obligation…well…here it goes….I was informed about misreporting of sales in a small establishment and consequent embezzlement of cash by the cashier. It is a small business where customers will never like to waste time in getting receipts for buying the product and hence, the feasibility of installing a billing machine was out of question. The proprietor was more than 80 years and wanted to be financially independent of his well settled children. So the income from this small establishment was used by him for the day to day expenses and his medical expenses and also towards some philanthropy. As he does not want to depend on anybody for his financial needs and also to keep himself physically and mentally active, he had not closed shop. He used to visit his shop daily and sit there for a few minutes. He was telling to me about this issue since some time now. So finally I freed, and made myself available and that fine day reached the place before it was opened and sat in the corner of the establishment observing the activities there. They were into preparing and selling 2 major set of food items with 2 points of production and a single point of sale. I collected the details of the raw materials used in the production and the details of the suppliers of the raw materials. I had started to take count of the sales physically sitting in the corner. During the course of taking stock, I noticed that at one point of production, the item made was not the final product and had to be further processed before delivery to the customer. However, at the other point, the product made was final and no further processing was required. So, it became convenient for me to take count of one set of item at the point of production and the other set at the point of delivery. It was also observed that both the sets of items were also given on credit to some customers and these details were noted in a separate small diary maintained with the cashier. I had also wantonly exposed to the cashier that I was noting down all the transactions happening – including the details of purchases of the raw materials, the suppliers, sales, etc so as to indirectly force him to submit atleast a logical figure of sales/cash balance to his employer. At the end of the day, I informed the proprietor that I will discuss the issue with him the next day.

Next day, I asked him as to how much did the cashier report about the sales and cash balance. He informed that there was no difference, and the figures remained the same as in the previous days. Now came the real challenge for me to diplomatically tackle the cashier, as I didn’t want to affect the proprietor emotionally because he had felt that this cashier was way better than the previously employed ones and that it was difficult to get good honest workers and also he wanted to avoid confrontation. Moreover, inspite of being made to know that I had taken the details of sales and purchases for the whole day and submitting the same fudged figure to his employer exhibited the hardcore nature of the cashier. I asked the proprietor to summon the cashier and when he came, I asked him whether he had submitted the accounts correctly and whether any other amounts are to be corrected, for the business which happened on the previous day as there was a huge discrepancy in the figures of sales/cash which he had submitted to the proprietor and the figures which I had. I also asked him to name the customers to whom supply was being made and the accounts were settled on weekly/monthly basis, which he tried to avoid. But on persistent questioning, he had to spell out the names which were recorded by me and once when he had disclosed their names, he told that for some of the customers the items were supplied at lesser rates. So, that amounts were reduced and I arrived at the final figure, which I did not show to him. However, he was eager to know the amount of discrepancy which I had worked out. Having culled out all the details, I told him that my job was to place the facts and figures before everyone on the table and that being experienced for 24 years in the field of detection and investigation and dealing with wide variety of people, I told him that there is a shortage of 4x of the cash balance(‘x’ being the balance of cash after embezzlement which he regularly gives to the proprietor) and suggested to him to have a discussion with his accomplice and take a good decision, as he had a family with 2 small children to take care and also the proprietor was a good pay master(the wages given to the workers were more than what other employers give in the same industry). He was embarrassed and also shocked to hear about his accomplice being exposed. I told him that my duty was not to embarrass anybody, but to make them realize that what they were doing was not correct and that if he wanted more pay, he could ask his employer who was ever ready to do. Oh..well, the accomplice was the one who was looking after one of the two production point. I also told him that, being from law enforcement, the moment I meet an individual, he tells all about himself, without me seeking anything. With that the cashier was told to leave and resume his work. The proprietor was visibly happy and greatly relieved. I also told the proprietor to keep a tab of the weekly/monthly settlements of amount from some customers, as I had suspected that these were not being given properly to the proprietor. On enquiring from the proprietor, the next day about the submission of accounts by the cashier, he told that the cash balance was “4x”. However, I cautioned the proprietor that “A Dog’s tail cannot be straightened”.

Lack of gratitude combined with greed and absence of Love/compassion leads to selfishness and dishonesty. This suggests the importance of hiring honest persons.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s