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"Double charging"

JazzyBirdJazzyBird Settling In NicelyRegistered Posts: 15
Hi everyone - me again with another issue! Sorry

What would you do in this scenario:

Person A owns 2 completely independant businesses - lets call them M & P.
Business M invoices business P for 10 widgets for £200 and said invoice gets paid. All legite, as business P did get the goods etc.
Person A then gets an invoice from their supplier for £75 for the wigets and asks them to "rip up" the original invoice to company M and to re-invoice to company P (I have seen proof of this).
So therefore company P (who is already in dire financial difficulty) is paying for something twice and company M is getting the money and "sales" benefit.

As the "finance person" how would you deal with this? I definately want to voice my objections, but want to see what everyone else thinks and what angles you would take.

Thanks!

Roll on the resignation day!

JazzyB

Comments

  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    JazzyBird wrote: »
    Hi everyone - me again with another issue! Sorry

    What would you do in this scenario:

    Person A owns 2 completely independant businesses - lets call them M & P.
    Business M invoices business P for 10 widgets for £200 and said invoice gets paid. All legite, as business P did get the goods etc.
    Person A then gets an invoice from their supplier for £75 for the wigets and asks them to "rip up" the original invoice to company M and to re-invoice to company P (I have seen proof of this).
    So therefore company P (who is already in dire financial difficulty) is paying for something twice and company M is getting the money and "sales" benefit.

    As the "finance person" how would you deal with this? I definately want to voice my objections, but want to see what everyone else thinks and what angles you would take.

    Thanks!

    Roll on the resignation day!

    JazzyB

    Took me about 4 reads to get my head around that one!

    Firstly M & P are not completely independent, because they are controlled by the same person, but moving on... [glad to hear you are doing that, by the way!]

    It's wrong. I've seen it happen (please reissue to the right company) but only in cases where it was genuinely issued to the wrong company.

    This sounds like Person A is trying to artifically improve the profitablilty of company M (knowing that Co P will likely go bust anyway) and this is wrong. It's probably Fraud.

    If I was working for company P, I would refuse to pay one or the other invoice and only pay one as they've only received one lot of widgets. This seems to be a tiny aspect, though, of a rather grim and dodgy bigger picture!
  • JazzyBirdJazzyBird Settling In Nicely Registered Posts: 15
    Monsoon wrote: »
    Took me about 4 reads to get my head around that one!

    Firstly M & P are not completely independent, because they are controlled by the same person, but moving on... [glad to hear you are doing that, by the way!]

    It's wrong. I've seen it happen (please reissue to the right company) but only in cases where it was genuinely issued to the wrong company.

    This sounds like Person A is trying to artifically improve the profitablilty of company M (knowing that Co P will likely go bust anyway) and this is wrong. It's probably Fraud.

    If I was working for company P, I would refuse to pay one or the other invoice and only pay one as they've only received one lot of widgets. This seems to be a tiny aspect, though, of a rather grim and dodgy bigger picture!

    lol - sorry about that! That's actually me trying not to be confusing! I see I was unclear in my statement about them being independant. What I meant to get across is that they are not part a group, so it's not something that could be an interco. charge.
    Thanks for your advice, I know if I refuse to write the cheque though he'll sack me on the spot (which could be fun from a tribunal point of view!) and write the cheque himself anyway! I am going to question it with his partner in the other business (who is now a director in ours) and see what he thinks of the dodgy dealings. At the moment I am getting everything in writing and keeping hardcopies at home!

    Right - I have a resignation letter to draft!
  • RinskeRinske Font Of All Knowledge Registered Posts: 2,453
    If you plan to resign and have another job waiting/ are not depending on his reference anyways, maybe refuse to write the cheque and take it to tribunal? I mean, it's one way that shows what kind of business he runs...
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    Rinske wrote: »
    If you plan to resign and have another job waiting/ are not depending on his reference anyways, maybe refuse to write the cheque and take it to tribunal? I mean, it's one way that shows what kind of business he runs...

    If you can cope with it, that's the way I'd be wanting to roll.... :D
  • JazzyBirdJazzyBird Settling In Nicely Registered Posts: 15
    lol - I am getting some great suggestions and not one's that I was expecting!
  • blobbyhblobbyh Font Of All Knowledge Registered Posts: 2,415
    I'm thinking false accounting and complicit wrongful/unlawful trading from company P, especially if they have little or no means or intentions of settling invoices by acting in a way that could be deliberately detrimental to their creditors. Do you think the intention is to eventually try and liquidate company P?
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    Blobby you put it in far better language than I, but that sounds spot on.
    JazzyBird wrote: »
    lol - I am getting some great suggestions and not one's that I was expecting!

    Out of interest, what were you expecting?
  • JazzyBirdJazzyBird Settling In Nicely Registered Posts: 15
    Thanks Robert,
    Yes I think it's being stripped and hung out to dry. :-(

    Monsoon,
    Not sure really! I'm not someone who tends to expect anything in particular, but I do tend to not expect things iykwim?!
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    ikwym :)

    Are you looking for a new job?
  • sdvsdv Experienced Mentor Registered Posts: 585
    JazzyBird wrote: »

    Person A owns 2 completely independant businesses - lets call them M & P.
    Business M invoices business P for 10 widgets for £200 and said invoice gets paid. All legite, as business P did get the goods etc.

    As the "finance person" how would you deal with this? I definately want to voice my objections, but want to see what everyone else thinks and what angles you would take.


    JazzyB

    Business P

    The purchase ledger clerk will have married PO, Delivery Note and maybe GRN with the invoice from Company M. It will also be confirmed by an auhorised person to pay the invoice.

    JazzyBird wrote: »

    Person A then gets an invoice from their supplier for £75 for the wigets and asks them to "rip up" the original invoice to company M and to re-invoice to company P (I have seen proof of this).

    So therefore company P (who is already in dire financial difficulty) is paying for something twice and company M is getting the money and "sales" benefit.

    JazzyB



    Business P

    When an Invoice is received from the Supplier of widgets, this invoice will NOT have been authorised to pay because of missing PO and delivery note to and from the supplier company.

    This invoice should not be paid.

    If person A wants Company P to settle with the supplier, then a DEBIT NOTE needs to be raised against Company M. This must be authorised by person A

    NO double accounting!
  • JazzyBirdJazzyBird Settling In Nicely Registered Posts: 15
    Thanks for your post SDV. The concern is actually company M and Person A ripping off company P.

    Has anyone ever had any experience of Director misconduct? Ie, is there someone it can be reported to?
  • JazzyBirdJazzyBird Settling In Nicely Registered Posts: 15
    Monsoon - Yes I will be. I don't suppose you need an Accountant/Finance Manager? ;-) lol
  • blobbyhblobbyh Font Of All Knowledge Registered Posts: 2,415
    If company P becomes voluntarily insolvent (especially if that's the intention by deliberately building up unpayable debts in P and leaving M cash rich), the insolvency practitioners during their investigation will interview the directors involved and among other things, find out if they've breached their fiduciary duties. Before that point, other sharholders of the company ought to have a right to know what's going on but disregarding the moral issues, I'm not sure if it's your duty to report it directly to them.

    Steve Collings is a good person to ask for this one and whose advice I sought a couple of years ago when I was in the same position you are in now.
  • sdvsdv Experienced Mentor Registered Posts: 585
    JazzyBird wrote: »
    Thanks for your post SDV. The concern is actually company M and Person A ripping off company P.

    Has anyone ever had any experience of Director misconduct? Ie, is there someone it can be reported to?

    This is a situation where AAT Guidance on Professional Ethics may throw some light.

    The difficulty you and I may experience is to separate our personal moral issues and acting professionally as an AAT member.

    From AAT Guidance on Professional Ethics

    2.5 Confidentiality
    Members should respect the confidentiality of information acquired during the course of performing professional
    work and should not use or disclose any such information without proper and specific authority or unless there is
    a legal or professional right or duty to disclose.

    3.5.4 Confidentiality concerns the matter of usage of information and not just non-disclosure or disclosure. A
    member acquiring information in the course of professional work should neither use nor appear to use that
    information for personal advantage or for the advantage of a third party.

    An AAT member has to respect the client’s/employer’s confidentiality of information even if that information goes against the grain of personal moral.

    I am having a difficulty in interpreting “unless there is a legal or professional right or duty to disclose.”

    When and to whom do I disclose this information?
    From AAT Guidance on Professional Ethics

    2.6 Professional behaviour
    Members should act in a manner consistent with the good reputation of the profession and refrain from any
    conduct which might bring discredit to the profession.

    We as an AAT members have to be very careful in how we use the client’s/employer’s confidential information acquired during the course of an assignment/employment. If there is a miss-judgement we could easily lose our AAT membership. A phone call to AAT Ethics advise line should be sought on 020 7415 7619
    From AAT Guidance on Professional Ethics

    Resolution of Ethical Conflicts

    3.3.1 From time to time members may encounter situations which give rise to ethical conflicts. Such conflictsmay arise in a wide variety of ways, ranging from the relatively trivial dilemma to the extreme case of fraudand similar illegal activities. If members are instructed or encouraged to engage in any activity which is unlawful they are entitled and required to decline. For example, members should not be party to the falsification of any record or knowingly or recklessly supply any information or make any statement which is misleading, false or deceptive.

    3.3.2 If the member would feel uncomfortable defending an action in open court or to the press then it is likely that such a course of action should be avoided on ethical grounds.

    I would feel uncomfortable in defending the issue of cheques to Company M and the supplier of wedges and therefore I should refrain from such an action. But this will have consequences.
    From AAT Guidance on Professional Ethics

    4.2 Conflict of Loyalties

    4.2.1 Employed members owe a duty of loyalty to their employer as well as to their profession and there may be times when the two are in conflict. An employee’s normal priority should be to support his or her organisation’s legitimate and ethical objectives and the rules and procedures drawn up in support of them.

    However, an employee cannot legitimately be required to:
    (i) break the law;
    (ii) breach the rules and standards of their profession;
    (iii) lie to or mislead (including by keeping silent) those acting as auditors to the employer; or
    (iv) put their name to or otherwise be associated with a statement which materially misrepresents the facts.

    4.2.2 When members become aware that their employers have committed an unlawful act which could compromise them every effort should be made to persuade the employer not to perpetuate the unlawful activity, and to rectify the matter.

    4.2.4 If employed accountants cannot resolve any material issue involving a conflict between their employers and their professional requirements they may, after exhausting all other relevant possibilities, have no other recourse but to consider resignation. An employer may also be influenced in taking the right decision if it is made clear by the member that it will not be possible to continue as an employee if matters are not corrected. Employees should state their reasons for resignation to the employer but their duty of confidentiality normally precludes them from communicating the issue to others (unless legally or professionally required to do so).

    4.2.5 Before resigning it is strongly recommended that members should obtain appropriate legal advice.

    If you can not get person A to do the right thing, then paragraphs 4.2.4 and 4.2.5 are clear in their recommendation.

    Unfortunately you have found yourself in a no win situation and maybe it’s time to move on to better things.
  • anniemanniem Experienced Mentor Pewsey, WiltshireRegistered Posts: 1,325
    Wow, SDV, what a post! Congrats - I'd have you on my side, please!
    FMAAT - AAT Licensed Member in Practice - Pewsey, Wiltshire
  • JazzyBirdJazzyBird Settling In Nicely Registered Posts: 15
    SDV - that was fantastic information. Thank you very much.
    Now please can you write my resignation letter?! ;-) lol
  • anniemanniem Experienced Mentor Pewsey, WiltshireRegistered Posts: 1,325
    JazzyBird - I do feel for you, you have been put in an intolerable situation, which is most unfair.

    Good luck and be proud of yourself ... a lesser mortal might not have acted so wisely!

    Best wishes

    Anna
    FMAAT - AAT Licensed Member in Practice - Pewsey, Wiltshire
  • RinskeRinske Font Of All Knowledge Registered Posts: 2,453
    JazzyBird wrote: »
    SDV - that was fantastic information. Thank you very much.
    Now please can you write my resignation letter?! ;-) lol
    Jazzy,

    The resignation letter should be:

    Hi boss,

    I am resigning per direct, because I don't want to work here anymore, because you all smell!!!

    Regards,

    Jazzy

    On a serious note, I am not sure if you should give them the exact reason or keep it onto general points and just say you got something better coming along.

    Cheers,
    Rinske
  • blobbyhblobbyh Font Of All Knowledge Registered Posts: 2,415
    A resignation letter may refer to a verbal conversation in which you expressed your reasons for leaving (if asked) but I certainly don't think you should put those reasons into writing. I'm guessing you still have loyalties to your employer and hoping things will somehow turn around but generally they won't, bad director habits will nearly always return and ultimately once you're away - whether voluntarily or equally likely as a result of inevitable redundancy - it'll happily become a distant memory.
  • JazzyBirdJazzyBird Settling In Nicely Registered Posts: 15
    Hi everyone,
    Just wanted to say thankyou for all your input, support and advice! :-)
    Jazzy.
  • anniemanniem Experienced Mentor Pewsey, WiltshireRegistered Posts: 1,325
    How are things going now JazzyBird?
    FMAAT - AAT Licensed Member in Practice - Pewsey, Wiltshire
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