Bonds have always been a happy hunting ground for the trust thief. We outlawed cash in the office to stop the thief from pocketing the bond! We would have hope that bond theft was impossible when the tenant was given control to lodge their own bond! Leverage has found a person who has even outsmarted this safeguard.
This experience and clever property manager developed a scheme whereby she would lodge with the bond board a release of the full bond to the tenant. Considering the bond was being released back to the tenant, the bond board happily transferred the funds. Unknown to the Bond Board, the account given on the application to release was an account in the name of the property manager. Over several months, they were able to collect over fifty thousand dollars.
We thought this was impossible due to the need for the tenant to approve. No, we understand that approval is not always sought when the full bond is being returned. We also understand that the property manager when pressed would give a Gmail or Hotmail account. Guess what, created by the property manager. This meant she had control over the release, approval and account number.
What about when the tenant wanted their bond? The property manager merely paid them their bond. Simply, she was rotating the bonds to hide the theft.
What is the lesson? As part of your audit procedures, you should check the bonds lodged each month and reconcile the bonds on a quarterly basis.
It doesn’t matter what measures you take the good thief will always prosper.