Vol. 81, No. 12, December
A Partner Needs to Be Actively
Involved in the Payment Process
by Tracy L. Coenen
There are two inexpensive and simple steps that can be taken to
provide more oversight for the disbursement function at a law office.
First, a partner needs to be actively involved in the process of issuing
checks and payments.
It’s not enough to simply glance at checks to vendors and
immediately sign them. Before any check is signed or sent out, it should
be compared to an invoice, credit card statement, or other documentation
that will help verify the legitimacy of the payment. This reduces the
risk that an employee pays a personal credit card with company funds or
otherwise improperly issues a payment from the firm’s checking
The second step to increase oversight at a law firm is involving
at least one other person in some of the functions. If the office
manager is disbursing funds, another employee should do the bank
reconciliation. This provides a natural checks-and-balances situation,
in which the second employee is verifying the work of the office
If the office manager is responsible for preparing payroll checks or
reporting the payroll information to a payroll service or preparation,
another trusted employee should examine the payroll records before the
paychecks are distributed. The second employee should verify that only
legitimate employees are being paid and that proper pay rates and hours
There is a side benefit to having another employee involved in
these accounting functions: If the office manager is unexpectedly absent
for an extended period, there is at least one other employee who has
some familiarity with the financial matters.
In addition to these two key components of fraud prevention,
it’s also important for the managing partner to be actively
involved in the firm’s finances. This means doing spot checks of
accounts, examining documentation, and verifying the flow of
It’s important that unusual things like missing or altered
documentation, unexplained changes in revenues or expenses, and payments
to questionable third parties be closely examined. Things like these can
be indicators of fraud, so they should be eyed carefully.
From a management standpoint, it’s always a good idea for
the head of the firm to have a good working knowledge of the numbers.
From a fraud prevention standpoint, being involved with the finances is
a very effective way to stop dishonest employees. If an employee knows
management is actively involved with the numbers and regularly looks at
financial documentation, there is less of a chance that she or he will
attempt to steal from the firm.