Hi Everyone, Last year in February 2017, I saw a wire transfer to a dealership in Santa Monica. The wire description mentioned one of my staff's name. The wire was sent by one of our co-trustee (P). At the time, I thought the trustee (P) will give me the wire back up and an instruction as to what that is for as this is our usual procedure. In November 2017, while doing the budget and planning for the new year, I realized that I haven't gotten anything from the trustee regarding the wire that I saw in February 2017. So I became suspicious as it's been 9 months since the wire was initiated. So I went to the GL and found out that my staff (for whom a car was purchased) booked the entry by creating a new asset account and she amortized that asset to the auto expense by $1,000/mo. I went to the journal entry ledger and found no backup. There are 2 trustees in our company (P and D). During the trustees meeting (there are 2 trustees in our company), I asked the question and asked for help and guidance as to what this is. He said he forgot and he will check with my staff for whom he purchased the car. Afterward, he made an amortization schedule and gave it to the staff for whom he bought the car for so she can book a journal entry. I saw this and showed it to the other co-trustee and he got pissed. My question to everyone is - Doesn't the scenario above considered a tax evasion? I dug further and found that the staff for whom the car was bought also didn't file 1099 for her son who works part-time in our office as a filing clerk. I found that we haven't filed 1099 for him since 2016. When I confronted the staff, she said that the trustee who bought her the car told her that she doesn't have to create 1099 for her son. So I went to the trustee to verify and his face went blue. I asked him to call the tax attorneys and advise me what to do. Please help. Any advice is highly appreciated. Thank you!
Is it just me?
Answers
I cannot comment on whether it may be tax evasion.
Make copies of any documents related to this matter. Document your discussions with each person (when, where, what was discussed, what you asked/said, what they replied/said).
Consider sending a follow up email to the trustees, confirming your discussions with them and your request for obtaining outside professional advice. Ask them to respond soon.
Be prepared to seek another job if you feel you cannot work there any longer.
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Len,
Thank you for your reply. I have done part of what you recommended. I have all the copies of any documents related to this matter. However, I haven't yet documented my discussions with each person but I will.
We (Both trustees and I) had a meeting at the end of June which I haven't yet documented but I will. This meeting is where I asked what the transaction is for. I will also document the aftermath of such discussions.
One of the aftermath, the staff for whom the car was bought had written a letter complaining about me. After reading such letter, the trustee who bought her the car told the other trustee that if this staff were to sue us for stress, she will win. However, the other trustee (who is neutral) said that of course the controller is frustrated for the staff had entered a transaction (which is outside the norm of the business) without discussing it with her. So the neutral-trustee conducted a meeting which resulted in the staff admitting that she doesn't know she answered to me (please note I've been in the company for the last 7 yrs and she has been a clerk in the accounting dept for 27 yrs in the same company). So now she knows she answers to me. Whatever good that will do.
I am having a dilemma as to whether to stay or leave. I created the accounting system for this company. The 2 trustees are preparing me to become the CFO.