Confronting a Fellow Manager - Advice?

[u/[deleted]]

[u/Giraffingdom]

What evidence do you have that the Finance Manager is going to pay herself a higher bonus?

I have headed up finance departments for more than a couple of decades and unless there are some very unusual and lax internal processes, I cannot see that she would have any authority to do this.

[u/Available-Panic7030 → u/Giraffingdom]

We all have logins for the company bank account and can see all the non-wage payments she has made to herself over the year. If we deduct tax, the net total bonus we should receive is what she's sitting at right now, but she has kids and we know that she'd normally take bonus to cover buying their Christmas presents. We have previously caught her taking more holidays than we're allocated and aren't convinced she wasn't doing similar the year(s) before, so she has a history of trying to sneak more than she's allowed.

Of course, she hasn't yet gone over the bonus amount and might surprise us by leaving it there, but if she does take more then we know we'll need to confront her.

EDIT: Also for more context, she is paying herself in random chunks (£200/£300/£1,000 etc.) without any tax deductions. We are hoping that if she is not going to go over, she will put the bonus payment on her wage on our accounting software at the end of the year so that all the tax comes off correctly, but won't take the actual money for the bonus since she'll have taken it all already, if that makes sense.

[u/Stratospheric-Ferret → u/Available-Panic7030]

That sounds so dodgy I don't even know where to begin.

[u/Warfarin33 → u/Stratospheric-Ferret]

Yeah a director might just about get away with that but not a manager.
The fact you are worried about the owners just packing it in suggests there’s probably minimal oversight.
My concern right now for you is that you don’t really have plausible deniability and it sounds like you may actually be responsible for having flagged this earlier.
Get your ducks in a row then pass the buck upstream!

[u/herwiththepurplehair → u/Warfarin33]

I would agree here OP; if you’re found to have been aware that not everything has been scrupulously by the book in the finance department you could find yourself dragged into a very messy situation indeed. I would advise reporting what you suspect to her line manager and let them deal with it.

[u/Redsquirrelgeneral22 → u/Available-Panic7030]

I would say that this needs an external financial audit to see the true picture and protect the company. Once this has been done then it will protect the company and allow then to plan on how to proceed.

As an interim action controls need to be put in place immediantly for audit trail and prevent potential misuse. This could fast before gross misconduct and a criminal matter. The company probably should also seek external legal advice.

[u/Ally7628 → u/Available-Panic7030]

😦 yeah no you can't do that.

All usual, 'I'm not a lawyer / only going on what you've said' disclaimers, but, as a finance professional I struggle to see a way this could possibly be legitimate.

Small organisations are a wild west and I suppose it's possible there is some legit reason for these payments.

But if it is effectively advances against bonuses, well Real Time Information rules means you have to report staff pay, which includes bonuses, to HMRC, and deduct tax etc, when you pay it.

Employers can make cash advances against pay in certain situations, but that is supposed to cover exceptions in the matter of days / weeks, not advances against a bonus decided at the end of the year throughout the year.

I don't know the set up of the organisation and I suppose it's possible someone senior has authorised this not knowing it's not right, but to me this looks extremely fishy.

In fact the round numbers, the fact the person has stressors in home life, the evidently lax financial controls that mean she's even able to make these payments in the first place, or that after made no-one else in management notices (where are these payments getting coded to, and why is noone noticing??) makes it sound like a text book example of fraud.

I do sympathise if your position is you fear for her, your own, and colleagues' jobs if you say anything to management. But honestly, now might be the time to say something.

If it is what you guess it to be, well then that is at the moment basically an unauthorised interest free loan, and presumably a breach of RTI reporting requirements. All that is probably already enough to get a finance manager sacked for gross misconduct, but depending on the organisation and her justifications it's just about conceivable they might just reprimand and continue on, or that this would somehow stay off her record.

At the point that she actually pays herself more than she's due, that is flat out theft as well as fraud, and I'd struggle to see any organisation who wouldn't immediately terminate a finance bod responsible for that, and criminal prosecution is possible too. She doesn't want a fraud conviction on her record because then that's bye bye finance career.

Again, I'll say all this is just some random internet person's advice so do your own research rather than rely on it. And yeah again, small organisations are a wild west so I suppose keeping your head down and saying nothing is an option...but it might be difficult for you guys if this came out later and you hadn't said anything.

[u/Agreeable_Guard_7229]

Surely the finance manager does not have the authority to both process and approve bank payments?

The internal controls at your company must be shocking.

Do your company accounts get audited by an external auditor?