Larry’s Laws of Larceny- Law 10: Investment Income Disappears if you Don’t Account for itBondBeebe
Larry Beebe, CPA
Entities have internal control systems that insure that investments owned by the organization are properly accounted for. Often the internal controls over the income of those investments is lacking.
During the audit of a pension fund, we examined whether the income on a $5,000,000 bond with a 9% interest rate had been received. We found that one of the semi-annual $225,000 interest payments was missing. When we tracked down the missing payment we found that it was being held by an investment advisory firm in new England. They said they know the money did not below to them. “We were just waiting for the rightful owner to claim it” was their story.
Someone, either in the organization or an outside investment consultant, should have the responsibility to insure that all investment income due to the fund has been received.