Your Accounting Department Can Make You More Profitable, You Just Might Not See It at First Glance
By Jorge Arrieta
As a young internal auditor, it can be discouraging to work in an industry where the importance of an accounting department and dealership auditors can be unappreciated or undervalued at times. Understandably, most automotive dealerships are driven by the bottom line, which may put the accounting department in a disadvantaged position due to their work not directly translating to immediate or measurable profits.
However, we often come across articles with a headline such as “Dealership controller embezzles $1.1 million”. This article in Automotive News written by Eric Freedman told the story of Controller Vanessa Vence-Small. According to the article, the Controller started to embezzle 50 days after she got hired and ultimately pleaded guilty to wire fraud. In another article just recently reported by Tariq Kamal in Auto Dealer Today with the headline “Former GM gets 4 years, Owes $8M for Embezzlement”. The article revealed the general manager had worked for Sonnen Motorcars Audi and Volkswagen dealerships for seven years and embezzled 6.6 million by submitting invoices for nonexistent advertising. Just recently in our home state of Florida, Jeffrey Bodkin, former controller was charged with one count of felony grand theft of $20,000 to $100,000 and one count of felony fraud obtaining property over $50,000 according to the article in Automotive News, written by Melissa Burden. According to the dealer principal, this was the third instance of employee theft the dealership had faced in the past few years. Articles related to this subject do not require much digging and the frequency of these stories can be alarming. By now I know what you are thinking, this has not and will not happen in my dealership. The reality is, these types of fraudulent activities can occur in the best run dealerships, and with highly trusted employees. No dealership is truly exempt from the risk of fraud.
It’s a shame how these stories can negatively the automotive industry but, it is important to see the value of these stories which can bring these issues to light. The big headline losses can give dealers perspective regarding the value of a well-run and skilled accounting team.
Some of the above mentioned embezzlements may have been mitigated, detected, or prevented with strong internal controls by a skilled accounting department, and the “second set of eyes” gained with an internal audit function. The responsible individuals will typically treat every employee at the same level and question their transactions objectively.
The purpose of this article is not to create panic but instead create awareness of the assets you may already have in place and the impact to the bottom line which your accounting professionals can bring.
Reconsider the value of your accounting department, as they can be one of your single greatest assets in preventing and detecting fraud. These individuals may be an expense, but in reality, with the right professionals on your team, they can directly benefit your bottom line by keeping more of your hard-earned revenues in the dealership where they belong.