It was time for my physician-client to buy out the senior physician. His good friend is a corporate attorney. The practice was incorporated so the attorney thought he knew how to advise my client who felt the price was inflated. The friend said he knew some great corporate CPAs—my client hired them to the tune of $25,000.
What the attorney and the accountants didn’t know was that a medical corporation comprised of two doctors is not run like huge non-medical corporations. These high-priced CPAs declared the expenses were legitimate, the books balanced, and nothing looked unusual. My client wasn’t satisfied. His gut told him something was rotten. He called me in, for much less than $25,000.
The wife of the senior partner wrote all the checks using QuickBooks. I saw a typewriter on her desk and asked why. She said often she used it to write checks when she was in a hurry. In a hurry? The computer is always on and you can print individual checks with that system.
I asked the CPAs a basic Accounting 101 question: Had they compared the checks with the check register produced by QuickBooks? They had not. The only reason she would type checks is if she were paying herself, her husband, or their children and entering the checks into the computer with different payees. That’s exactly what she was doing.
Lesson: Hire the right experts or you might as well throw your money out the window.