The importance of accuracy and transparency in your firm’s accounting practices cannot be overstated. At the office of Bellingham, MA CPA Ann Irons, we recently read about a prominent real estate lawyer whose shoddy internal bookkeeping brought down his high-volume practice and led him to surrender his law license.
No Room for Error: Two Cautionary Tales
As more details of the case were made public, it became clear that several of the offending incidents could easily have been avoided. For example, it was revealed that a member of the accounting department had embezzled a whopping $38,000. Worse still, the firm’s bookkeeping and financial statements were incomplete and so disorganized that the crime wasn’t discovered until several years later.
By that time, it was already too late. It was later revealed that the discrepancies in the firm’s real estate trust account exceeded $176,000. The lawyer, desperate to cover signs of wrongdoing, resorted to borrowing money from friends and family to cover the deficit. It didn’t end well.
And what about the newly minted lawyer in another state who lost her license after a poorly managed real estate case led to fly-by-night lawyering and failure to submit updated contact information? Had she provided investigators with her accounting records, she would most likely have kept her license or had it suspended temporarily. Instead, she lost everything less than five years our of law school.
Why?
She claimed that she was unable to locate her records. Whether she physically lost the records or was deliberately withholding evidence of poorly managed bookkeeping practices remains unclear.
It Can Happen to Your Practice, Too
When something like this happens, who do you blame? It’s easy to say that this couldn’t happen in your own practice, that neither you nor your staff are capable of such flagrant ethical violations. You’re probably right.
If you’re wrong, everyone--you, your partners, your staff, your clients--suffers.. Most importantly, understand that an action need not be deliberate and unethical to have devastating consequences. Other internal accounting-related risks to consider include:
- Errors made by employees who have no specialized knowledge, whether of real estate, law, or both
- Poor document management and organization
- Failure to follow GAAP and making timely entries
- Too much time spent on basic tasks, such as opening mail, recording accounts payable and accounts receivable
- Lack of awareness regarding regulatory and tax-related changes
If you see these weaknesses in your own practice, we invite you to consider enlisting our services. Our services are designed to help you create a more efficient, organized, and more profitable practice. You know real estate law. We know real estate accounting.
To learn more about our tax, bookkeeping, and accounting services in Bellingham, MA, or to request an appointment with Ann Irons, CPA, LLC, contact us at (508) 966-0700. We welcome individuals and businesses in and around Bellingham, Medway, Milford, Woonsocket, and Boston.
Ann spent over 25 years in the financial service industry, gaining knowledge and experience that allows her to provide an array of tax, bookkeeping, and accounting services for her clients. Relying on a stringent code of ethics and a dedication to maintaining the highest industry standards, Ann works hard to ensure her clients receive the quality service they’ve come to expect. A member of AICPA and MSCPA, Ann has also had an article featured in the renowned publication, Banker and Tradesman. 
