Disapearing Sales ? need help

[pdathe]

What is the name of your state (only U.S. law)? Minnesota
Hello,
I am a Sales Director for a small manufacture of molded plastic accessories. I work for a this small business where I am paid a base salary (1/2 of a normal income) and commission on increase in sales. The sales numbers are the top line of our chart of accounts.
every week, sometimes many times per week, I review the numbers in QuickBooks to see if our sales are down for the quarter or if they up for the quarter from the previous year. (sales persons speedometer)
I only get commission on sales that are above the same quarter the previous year (GROWTH). I always run the same report “Reports” ,“Company and financial” , “Profit and loss previous year comparison” I then plug in the beginning date of the quarter to the last day of the quarter.

I take screen shots of the books (save a .pdf) because I started noticing something I can’t explain.
That the sales dollar values were going down a week or 2 weeks after the books closed. (should be no sales activity, up or down)
for example: It say we booked $229k in sales for April 1st through June 30th in 2017 which was $116K more than Q2 previous year 2016 ($113K Sales).
Then 2 weeks later I look in QuickBooks under the same date range and same report type and the sales numbers have gone down. In this example from $229k to $208( -$21k)
We have multiple sales line items and it is happening on 3 of the 4 line items. usually adds up to over 70k to 100k per quarter.
I have asked our controller and she tells me that I just looked at the books in the exact time she was moving money in and out. And maybe I printed the report exactly at the time she was moving money in and out of the accounts.
What doesn’t make sense is that I have multiple days of the same booked sales (at example $229k) over a week of this wouldn’t make sesnse.

Then I asked myself if maybe we invoiced an order, or multiple orders, that we didn’t ship. We would have to pull the sales out of the account to rectify the books. But because we have it happening in 3 of the 4 accounts and it has happened 3 consecutive quarters I don’t think we have made that many mistakes.. so incorrect invoicing is probably not the problem.
Then I thought a return? Maybe a shipping credit?
Nothing would add up to that kind of $ discrepancy…

My problem is that I am afraid of asking my employer and the controller for the real reason. There are multiple people in the company under me who get quarterly commissions and it seems like we are all getting robbed.
I am afraid I will lose my job if I point the finger. Not sure what to do.
Is there some type of accounting practice that I am not thinking about that could legitimately be effecting the invoiced sales on the top line or should that only grow with maybe some small credit adjustment corrections.

I am so confused and need some advice here.
I have worked for this guy for 9 years and have seen him screw others over. I worry it could be the owner and it could be the controller or both.
I would not ever want to point the finger unless I knew for sure or I could prove it.

Lawyers are going to cost me more time and emotional energy then I can handle.

 

[LdiJ]

What is the name of your state (only U.S. law)? Minnesota
Hello,
I am a Sales Director for a small manufacture of molded plastic accessories. I work for a this small business where I am paid a base salary (1/2 of a normal income) and commission on increase in sales. The sales numbers are the top line of our chart of accounts.
every week, sometimes many times per week, I review the numbers in QuickBooks to see if our sales are down for the quarter or if they up for the quarter from the previous year. (sales persons speedometer)
I only get commission on sales that are above the same quarter the previous year (GROWTH). I always run the same report “Reports” ,“Company and financial” , “Profit and loss previous year comparison” I then plug in the beginning date of the quarter to the last day of the quarter.

I take screen shots of the books (save a .pdf) because I started noticing something I can’t explain.
That the sales dollar values were going down a week or 2 weeks after the books closed. (should be no sales activity, up or down)
for example: It say we booked $229k in sales for April 1st through June 30th in 2017 which was $116K more than Q2 previous year 2016 ($113K Sales).
Then 2 weeks later I look in QuickBooks under the same date range and same report type and the sales numbers have gone down. In this example from $229k to $208( -$21k)
We have multiple sales line items and it is happening on 3 of the 4 line items. usually adds up to over 70k to 100k per quarter.
I have asked our controller and she tells me that I just looked at the books in the exact time she was moving money in and out. And maybe I printed the report exactly at the time she was moving money in and out of the accounts.
What doesn’t make sense is that I have multiple days of the same booked sales (at example $229k) over a week of this wouldn’t make sesnse.

Then I asked myself if maybe we invoiced an order, or multiple orders, that we didn’t ship. We would have to pull the sales out of the account to rectify the books. But because we have it happening in 3 of the 4 accounts and it has happened 3 consecutive quarters I don’t think we have made that many mistakes.. so incorrect invoicing is probably not the problem.
Then I thought a return? Maybe a shipping credit?
Nothing would add up to that kind of $ discrepancy…

My problem is that I am afraid of asking my employer and the controller for the real reason. There are multiple people in the company under me who get quarterly commissions and it seems like we are all getting robbed.
I am afraid I will lose my job if I point the finger. Not sure what to do.
Is there some type of accounting practice that I am not thinking about that could legitimately be effecting the invoiced sales on the top line or should that only grow with maybe some small credit adjustment corrections.

I am so confused and need some advice here.
I have worked for this guy for 9 years and have seen him screw others over. I worry it could be the owner and it could be the controller or both.
I would not ever want to point the finger unless I knew for sure or I could prove it.

Lawyers are going to cost me more time and emotional energy then I can handle.

I cannot think of any legitimate accounting practice that would result in such a phenomena. Even if they were writing off uncollectable accounts it shouldn't happen in that particular manner...and that would be a LOT of uncollectable accounts.

At the same time however, there probably is no boss that would be happy about an employee questioning their accounting practices.

 

[Mass_Shyster]

I've seen weird things like that when you select Cash Basis on one report and Accrual Basis the next time.

The only way to see what is going on is to do a detail report and save it. When the numbers change, run another detail report and compare line by line to the first.

 

[PayrollHRGuy]

First I have to ask, are you authorized to be accessing your employer's accounting program? If not I can see why you would be concerned about getting fired.

If you are authorized you either have the option to ask your boss about the issue and risk getting fired for something you will certainly get UI for. Or continue to live with the lower commission.

Is there an employment contract involved?

Did your company change accounting practices? i.e. Move from cash to accrual based accounting.

 

[LdiJ]

I've seen weird things like that when you select Cash Basis on one report and Accrual Basis the next time.

The only way to see what is going on is to do a detail report and save it. When the numbers change, run another detail report and compare line by line to the first.

Now that is a possibility that I had not thought of. If their accounting software allows that sort of thing to be done, then that could explain it.

 

[HRZ]

Many firms may be on accrual for tax purposes ...but what does your compensation agreement state ?

There might be a reason for a lag ...but follow your instincts and data ....

 

[pdathe]

I cannot think of any legitimate accounting practice that would result in such a phenomena. Even if they were writing off uncollectable accounts it shouldn't happen in that particular manner...and that would be a LOT of uncollectable accounts.

At the same time however, there probably is no boss that would be happy about an employee questioning their accounting practices.

That is what i figured... I agree, its tough to point the finger out of loyalty for your boss

 

[pdathe]

I've seen weird things like that when you select Cash Basis on one report and Accrual Basis the next time.

The only way to see what is going on is to do a detail report and save it. When the numbers change, run another detail report and compare line by line to the first.

I have definitly run the reports exactly the same, its always Accrual Basis. Every time! always has been for 8 years i have been here.

 

[pdathe]

First I have to ask, are you authorized to be accessing your employer's accounting program? If not I can see why you would be concerned about getting fired.

If you are authorized you either have the option to ask your boss about the issue and risk getting fired for something you will certainly get UI for. Or continue to live with the lower commission.

Is there an employment contract involved?

Did your company change accounting practices? i.e. Move from cash to accrual based accounting.

Hello PayrollHRGuy,
Yes indeed i have individual login access to the employer's accounting program. I look at it every day. It is a huge part of my job.
If i didn't get to see the increase in sales, i wouldn't be very motivated at all. I am the director of sales. It is my job to sell to all of these accounts and understand the price and volume they buy and will buy. i set up new accounts, special quotes, etc.. I have some accesses turned off. i can see most everything except details in payroll. I dont think i have "Audit" access either. i noticed they turned off one of my permissions then turned them back on a few weeks later after i complained... (another weird move)
I have a employment contract that states i can have books evaluated by an independent accountant / party, but the minute i ask that could be the end of me.? Owner has known to make a few Knee Jerk emotional firings and questioning his integrity just may be one of them.
its a tough position and i have been 100% loyal to him.

 

[pdathe]

Many firms may be on accrual for tax purposes ...but what does your compensation agreement state ?

There might be a reason for a lag ...but follow your instincts and data ....

my instincts tell me the money is being moved to a shell company. or maybe the book keeper is putting the money in her pocket and the owner himself doesnt even know.
I need more accountants to look at this so i dont make a silly mistake before looking for a new job.
right now, ending my 9 year run with the company and doing something else where i dont have to worry is maybe the move.
do i need a financial forensic accountant ?
does department of labor help with this?
is there some type of wistle blower protection?

 

[HRZ]

WEll I agree there might be a few missing details ....but so far the smoke suggests there is fire....keep good safe logs of sales in a safe off premises place as well as safe copy of your employment contract .

points I would double check are the definition of wages for MN dept of labor enforcement ( does it include earned commissions ) and the statute of limitations for filing a wage claim (probably 2 years )

I suspect you are right, you will be history at the first wave you make...so plan ahead and time the wave you make .

 

[PayrollHRGuy]

Hello PayrollHRGuy,
Yes indeed i have individual login access to the employer's accounting program. I look at it every day. It is a huge part of my job.
If i didn't get to see the increase in sales, i wouldn't be very motivated at all. I am the director of sales. It is my job to sell to all of these accounts and understand the price and volume they buy and will buy. i set up new accounts, special quotes, etc.. I have some accesses turned off. i can see most everything except details in payroll. I dont think i have "Audit" access either. i noticed they turned off one of my permissions then turned them back on a few weeks later after i complained... (another weird move)
I have a employment contract that states i can have books evaluated by an independent accountant / party, but the minute i ask that could be the end of me.? Owner has known to make a few Knee Jerk emotional firings and questioning his integrity just may be one of them.
its a tough position and i have been 100% loyal to him.

It is a tough position. But it still boils down to two options. Show the boss the discrepancy (which there is a chance he doesn't know about. Or live with the numbers you don't agree with. If I were you I would be looking for another job and when you find it have the books evaluated by by the independent accountant and sue them for breach of contract. I would also do that if you are fired for bringing it up in the first place.

Since you have access to the accounting program do you see any income source other than sales where they could be showing the income?

 

[LdiJ]

It is a tough position. But it still boils down to two options. Show the boss the discrepancy (which there is a chance he doesn't know about. Or live with the numbers you don't agree with. If I were you I would be looking for another job and when you find it have the books evaluated by by the independent accountant and sue them for breach of contract. I would also do that if you are fired for bringing it up in the first place.

Since you have access to the accounting program do you see any income source other than sales where they could be showing the income?

If he can view the individual transactions he might just give the books a quick review himself to see where the transactions are going. A sales account however is not a cash account. Therefore normally those numbers would not change unless there are returns.

For example if the sales figures on week 1 are 200k, and on week two they have changed to 180k, then a transaction in the books had to have been made. Therefore viewing that transaction may tell the OP something.

 

[HRZ]

Failure to pay wages is a big legal deal and opens up that the state goes after employer or prospect of attorney cost recovery if you use counsel... Check out your state wage payment law related sites and perhaps review your fact pattern with a good local labor law attorney

Important to verify that your commissions are wages as defined in your state .

IMportant in my mind that you can zero in on correct wage/ commission due and not leave major gaps in math .

BTW what is relevant time frame for increased sales and Commission computation and payout ..per contract and or. SOP

IT seems like your problem is not just one simple data glitch .

Get your exit options under control before things hit the fan?

 

[pdathe]

WEll I agree there might be a few missing details ....but so far the smoke suggests there is fire....keep good safe logs of sales in a safe off premises place as well as safe copy of your employment contract .

points I would double check are the definition of wages for MN dept of labor enforcement ( does it include earned commissions ) and the statute of limitations for filing a wage claim (probably 2 years )

I suspect you are right, you will be history at the first wave you make...so plan ahead and time the wave you make .

This is very good advice HRZ... i will set up a meeting with the MN dept of labor and keep good copies of all records. another good point you make is the time limitations. the only other thing is... if i see this hapening, how much other things have happened? am i seeing only what i got lucky to catch?
another thought is that it is a small chance that the controller (does all accounts recievable) may be moving the money in her own pocket without the knowledge of the owner. if that were the case, the owner would probably be glad that i brough it to his attention.
it is all so risky and has so many implications... (Deep breath) i just need to get my ducks in a row.

if you can think of "ANY" other reason this may happen, then please let me know.
thank you all for the dialog and advice! this is much much better than thinking about it all while laying in bed!
Regards!