What would you do if you found yourself in a position where you were falsely accused of misappropriation of trust money?
In my very early career I was a property management assistant, and part of my role was to receipt cash rents paid by tenants who came into the office to pay their weekly rent over the counter. The process was that the funds would be placed into a sealed envelope and then the envelope would be fed through a deposit slot that had been purpose-cut into the reception desk. The issue with the deposit slot was that it was big enough to stick your fingers through and was quite shallow, so the sealed envelopes were easy to reach for anyone inclined to do so.
Over a period of time, the contents of these envelopes began to change and the daily banking was falling short at the end of each day’s total. Sometimes the envelopes were missing small amounts such as $20 to $60, and sometimes as much as $500 at a time. Of course, as the person responsible for receipting rent, fingers were pointed in my direction.
My one saving grace was the fact that I was able to prove that I did the same thing every day, in the exact same way. Every time I took a cash receipt, I would place it in the envelope with the notes facing in the same direction. The notes would be banded, which made it easy to count them in the afternoon.
My signature was placed on the inside flap of the envelope and I also sealed it, drawing a diagonal line over the seal in blue pen.
The in-house thief fortunately was not aware of my process, but several other staff were able to vouch for the way that I did things. The tampered envelopes were an obvious stand-out, they’d been replaced with fresh ones, had no markings and the notes were not facing the same direction. The thief had tried to divert attention from their behaviour and onto me by placing the newly sealed envelopes back into the cash slot. Their thieving activity was later recorded and proven, and they subsequently lost their job – rightfully so!
Eighteen years later, I carry the same principles with me in my daily practice when it comes to handling trust money. It is very seldom that we handle cash receipts in 2016, it’s mainly EFT payments. However, there are still processes and procedures that I put in place to prevent anyone from trying any similar criminal action. Prevention examples may include:
- Using the same colour pen each day for receipting and an alternate colour for reconciling
- Entering your initials in CAPS instead of lower case when taking a receipt in your trust accounting software
- Signing and date-stamping everything
- Processing receipts at roughly the same time each day
- Writing explanations on the daily banking if receipts require reversal so others cannot make changes to the same transactions
- Logging out of your user profile in your property management software when you leave the office
Not only will adopting these practices in your daily trust accounting process stop others from misappropriating funds and framing you, but this sort of practice will be highly regarded by your auditor or regulatory body if and when your trust records are audited.
Have you ever been framed for trust fraud? Do you have your own unique process for daily trust accounting practices that you’d like to share? Had you considered these points and do you think that reading this experience will alter the way you manage the trust account? We’d love to hear from you. Share your thoughts/comments on this subject below.