I need advice on how to stop questionable accounting practices.

I recently started at the family business. I have noticed a few things that seem odd when it comes to the books. I am hoping to get some advice or find some resources. One of the partners has run two business into the ground, barely dodged tax evasion, and been bankrupt twice. The other partner is someone who I greatly respect and want to protect the best I can.

The business is a small business located in California. It is an s-corp with a 50/50 partnership. I have access to checking account details from the bank and I have limited details about other accounts from QuickBooks.

  • All of the checks are mailed to the questionable partner’s home, deposited online by him, then brought to me at the office to record in QB.

  • I can see in QB there are revolving credit accounts open but I have reason to believe the cards are not associated with the business even thought they are paying business expenses. In other words, the questionable partner is using personal cards to rack up “points” for business expenses.

  • Personal expenses are being charged to those same cards then the card shows a payment from the questionable partner’s personal accounts.

  • There are no budgets. Everything is paid with a card. Checks are rarely written.

  • The accountant is a personal friend of the questionable partner. So are the lawyers.

There is more amiss than just the accounting but I am more concerned with the accounting. This questionable behavior has to stop but I am not sure how to present it to the other partner. I need a plan first but I don’t know where to start. What resources are available? What should I be watching out for? Can this mess be fixed? Is there a better place to post this?

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