The One Thing You Must Do in QuickBooks

 In Better Business Finances, Post, QuickBooks Desktop, QuickBooks Online (QBO), QuickBooks Reports, QuickBooks Tips and Training

Did you catch these recent headlines?

  • 44 year old woman is accused of illegally reaping a windfall of over $100,000 from a renewable energy business (worked there 10+ years)
  • 39 year old man is accused of stealing over $100,000 from a nursing home 
  • Longtime 44 year-old employee is accused of stealing over $300,000 from a small business (worked there 16 years)

Is your business next?

Yep, it sure could be!

To find out, take a second to answer the following question…

“Is your QuickBooks properly set up to help you avoid potential fraud?”


Scam Artist

There is a common theme to all of the situations mentioned above.

It’s this…

The employee created a transaction in QuickBooks, then went back and changed it to cover their tracks.

And they did it over.

And over and over.

For months or even years.

For example, they wrote a check to themselves, deposited the check in their bank, and then changed the transaction in QuickBooks to show the check being written to a vendor.

Hey, nobody’s looking, right?

Business owners are too busy to be bothered with their accounting. After all, that’s what they pay the employee to handle for them!

If you have someone in charge of your bank accounts and/or credit cards and processing them in QuickBooks (or any other software for that matter), I urge you to take the following steps…



I get it. Accounting and bookkeeping are about as fun as a colonoscopy.

If you’re the owner, the less time spent on them, the better.

And that’s exactly what your “trusted employee” wants!

For you to give them free reign on everything, with no oversight or checks and balances.

That has to stop – there have to be checks and balances in place so you don’t become a victim like these businesses (and hundreds of others!)


Regardless of whether your business uses QuickBooks desktop or QuickBooks Online, a critical change needs to be made in your processes:

In Desktop – change the user settings so the user does NOT have the ability to change or delete transactions in the areas they have access to (example below is from Pro/Premier – Enterprise is slightly different):

QB Desktop User Setting

At a minimum, this forces the employee to void the existing transaction and  then create a completely new one. Transactions like these stand out front and center on the Voided/Deleted transactions report (Reports > Accountant and Taxes > Voided/Deleted Transactions Summary or Detail).

I know, they won’t like your for making their world more complicated. Too bad – so sad.

In Online – at the current time, there is no option at the user level to prevent changes to transactions (if there is, I’m not seeing it). This means it is essential for you the business owner to review the Audit Log (Gear > Audit Log) periodically and specifically look for transactions that were edited as shown in the sample screenshot below:

QBO Audit Log


If the thought of this happening to your business makes you nervous, that’s a good thing.

While you’re at it, you’ll also want to get this change in place – a segregation of duties when it comes to recording transactions and paying for them!

The same employee simply cannot be the one to handle both sides of a transaction – the data input and the actual payment.

  • For vendor and related payments, use an electronic payment system like that can allow for separate approval and payment processes
    • Get away from the whole “manual check run” idea – get it done electronically instead. You will be so glad you did. After all, it’s now 2020, not 1985.
  • It’s essential that you review each credit card and bank statement every month to ensure nothing “seems off”


In these embezzlement situations, things usually go undetected for quite a while.

However, there comes a time when the owner begins to wonder “where is all my cash?” After all, the profit and loss report shows I’m making money!!

But this question usually takes some time to formulate – 3 months. 6 months. A year or more…

If the owner chooses to pursue that line of questioning, all sorts of hell usually breaks loose. Outside accountants get involved. Employees scramble to cover. Lives are turned upside down.

It’s not a pretty picture.

I am not suggesting that these few modifications to your procedures will stop fraud and embezzlement all the time. Over the years, I’ve seen some really sophisticated scam schemes run on small (and large!) businesses – even outside auditors have missed these super-schemes.

However, they can certainly help bring a lot of these situations that are happening RIGHT NOW in many small businesses (maybe even yours?) into the light.

After all..

Sunlight is said to be the best of disinfectants” – Louis Brandeis


When I read about these situations going on in small businesses literally every few weeks (just set up a Google Alert for the word “QuickBooks” and you’ll see what I mean), it really makes my blood boil. It doesn’t have to be that way!

Does this subject resonate with you? Big deal? Little deal? Not worried about it?

Let me know…


Recommended Posts

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.