Need accounting expertise for a movie script

[Boodrow]

Howdy!

I'm currently writing a movie script dealing with an accountant that discovers his boss is embezzeling. The act of discovery is currently generic, but I'm wanting to add more specific points to add realism.

So my questions are:

1. How specifically would a business owner embezzle?
2. What are some ways that an accountant would discover it?

Thank you

 

[Kat Maple]

Hi Boodrow,

Well, really, here we are trying to stop that sort of thing and not teach it. If you must, then there are plenty of internet articles that go into detail on the specifics.

Thanks,

Kat

 

[stevuke79]

As part of my master's in accounting I literally took at least 2 courses on this exact topic... and btw various ways to conceal embezzlement is heavily tested on the CPA exam.. so I say it's fair game to discuss on an accounting forum!

So I assume the boss isn't the sole owner of the company, right? Because then he's just stealing from himself.. and perhaps the only thing the accountant might discover is an inappropriate tax deduction.. which of course once he discovers it he would just disallow the deduction when preparing the return.

So maybe he has a partner.. and he's stealing from his partner. (Maybe you want outside shareholders.. like a publicly traded company... let me know if I'm on the right track with two partners.)

So maybe the boss is "reimbursing" himself for business related expenses. And since he's the boss he can approve the expenses all on his own. (But a company with good internal control wouldn't allow you to approve your own reimbursement.)

Maybe the accountant is auditing the company reimbursement expense.. and he would notice that the reimbursements for this one manager were approved and time stamped at 11:00pm on a Friday night when no one else is around.

Or instead of two partners.. it's a big company and this guy is just a branch manager... so different scenario.. and maybe the company has a vender called "Best Office Cleaners" who is called on an as needed basis. And maybe the accountant notices that there are checks made out to "Best Cleaners" (I'm an accountant,.. I'm not an expert at naming companies) ... and at first the accountant assumes this is a typo and he makes a note to yell at the accounts payable manager not to just add a new approved vender to the system just because you can't find the vendor name right away. And he tries to delete "Best Cleaners" from the list of approved vendors but he can't because there are still open payables to that vendor. So he's like "what"? Did they make the check out to the wrong company? But how was it cashed? He then looks at the checks and sees that they have canceled checks for "Best Cleaners" which were endorsed by a familiar looking signature!!! Dun Dun Dun!!

(In case you don't get what happen, the boss opened up another company called best cleaners and started submitting invoices that just got paid by a payables manager who wasn't paying enough attention.)

Ironically the potential accounting frauds that are possible become somewhat more interesting when they are perpetrated by accounting staff and not managers.. take "lapping" for instance. (Tested on the CPA exam)

The boss sends out an invoice for a client's quarterly bill. The client sends back payment and the boss puts it in his pocket. Just as the bill is about to become 90 days past due it's time to send out the next invoice and the client, being a good client, pays it immediately before the account become 120 days passed due which would trigger a credit policy that would cause it to be written off and force the confused client to pay upfront next quarter.

(This of course makes more sense to be committed by a lower level employee. The "boss" doesn't usually open the mail in a big company. And if it's a small company.. then he's probably stealing from himself.)

And this would be discovered if the accountant makes a collection call and the client insists he already paid.

 

[Boodrow]

Holy frijolies, that's awesome! Thank you so much for the response.

Those are some VERY interesting ideas. You're right, stealing from himself doesn't really work. However, the story has changed a bit since I first started working on it. I'm now futher along in development with a producer and we've changed the idea that the boss is embezzeling to the idea that's he's laundering money for some very serious groups of ill repute.

Breaks down like this - Bad Guy owns a financial company (financial advisory although that's not set in stone), and he's been laundering proceeds for groups that engage in illicit activties, drug sales, illegal arm sales, human trafficing, etc - basically all the worst of humanity. BUT he's also been stealing from these groups. This ties into the ending when the Accountant spills the beans to the groups themselves, after figuring out the whole operation at the beginning of the movie, and the Bad Guy gets a very unwelcome visit from the groups he's been stealing from.

You think any of the ideas you mentioned can be used for that scenario, or are we talking about something completey different?

 

[stevuke79]

Money laundering is different. Nothing I said above would work.

But there are mountains of information on the internet about how it's done and how it's detected. Look up AML compliance.. and the three stages of money laundering. Literally maybe even take an AML class.

Financial advisors are perfect for money laundering. You call the financial advisor.. put some money into an annuity.. different accounts, different registrations.. then break the annuities.. pay the penalties.. but now this is annuity money not drug money.

Maybe the accountant figures it out because the patriot act requires a financial advisor to report transactions where the investor seemed indifferent to the termination fees and penalties and the general terms of the annuity... and also requires them to report transactions approaching $10,000 ... the limit that requires the filing of that AML Form 8300. If they are depositing $8,900 and are suspiciously uncaring about the terms, the returns or the cancelation penalties.. an advisor is required to report that. And if they break it a few months later and get 90% of their money back and seem unfazed,.. you definitely have to report that too. And that's why the accountant gets suspicious.

Frankly the TV show Ozark gives a fairly realistic picture of how a financial advisor can help launder money. Find a small business that needs some capital from you .. invest some capital .. take profits. Now this is your profit from a small business not your drug money.

Or if you want to make it a little more glamorous... he is syndicating for these "reg D" private placement investments in partnerships (look up business development companies BDCs, REITs, etc) .. that you have to be an accredited investor and the regulations and reporting are less strict because these are all "sophisticated accredited investors" (minimum net worth, minimum income levels have to be met) ... they all lose money and the investors keep liquidating their partnership interests and getting back 70 cents on the dollar.. but they keep coming back even thought they keep losing money.

But they're happy because it's really a money laundering scheme.

Maybe the accountant figures it out when he sees that each of these partnerships keep either lending money to the same small companies or maybe they keep buying and selling the same real estate investments.

Maybe layer all these ideas together....

But as a financial professional I notice that movies RARELY get this shit right and I always really appreciate it when the script is actually true to life on a technical subject. So good luck and let us know if we can help!

 

[Truemanbrown]

I remember being at University and being shown this film that was shown on BBCs HORIZON.

.

 

[DrStrangeLove]

Holy frijolies, that's awesome! Thank you so much for the response.

Those are some VERY interesting ideas. You're right, stealing from himself doesn't really work. However, the story has changed a bit since I first started working on it. I'm now futher along in development with a producer and we've changed the idea that the boss is embezzeling to the idea that's he's laundering money for some very serious groups of ill repute.

Breaks down like this - Bad Guy owns a financial company (financial advisory although that's not set in stone), and he's been laundering proceeds for groups that engage in illicit activties, drug sales, illegal arm sales, human trafficing, etc - basically all the worst of humanity. BUT he's also been stealing from these groups. This ties into the ending when the Accountant spills the beans to the groups themselves, after figuring out the whole operation at the beginning of the movie, and the Bad Guy gets a very unwelcome visit from the groups he's been stealing from.

You think any of the ideas you mentioned can be used for that scenario, or are we talking about something completey different?

Not embezzlement but money laundering. The Accountant uses a special purpose vehicle (SPV). He sets it up to help with "cash management" or "receivables management" for a legitimate firm that wants to securitize its widget receivables or something. He uses it to launder their funds, minus his "advisory fees", for re-use elsewhere. He mixes the illicit funds with the legitimate funds, so there's RICO exposure for the legitimate company as well.

But this SPV has someone who is embezzling from the Accountant. He's getting close to being late with "payments", so there's a time crunch to drive tension. He's juggling the criminals he's laundering for and the legitimate company/their auditors while trying to find the embezzler.

A film noir bent--no white hats in sight, but various grades of gray from pale gray to near-charcoal. An undertone of "how close to the edge can you get without falling over?"