I would have thought this was "normal care" (Hiring and paying someone to do the book-keeping is not enough)


Apparently (so I am told), hiring someone to do the book-keeping for a company is not sufficient care in making sure the books are kept properly. Just seeing that witholdings are showing up on pay slips and assuming they are being remitted is not enough. Instead, the director is expected to track down and be sure that the remittances are being done (because they are liable for them if they are not).

That's a bit difficult to do if you never get a chance to see the books, but the idea is apparently that if you (as an employee or shareholder) are accepting the cheques then you (as a director) are considered to be required to have audited the books. You are expected at least to have not cashed your own salary cheque until you've made sure that the government got their slice.

Also, it really doesn't pay to be patient in these cases. Letting someone string you along for years with promises to get the books up to date and in your hands means that hundreds of thousands of dollars of personal liability can pile up for the directors.

[Update: seems a directorship is an official capacity for a company, not something you can just fall into. AFAICS right now I never actually became a director.]

Comments

  1. Daniel

    Daniel on 12/06/2006 7:26 p.m. #


    I feel sorry for you, my parents found themselves in exactly the same situation with their small shop and I remember how frustrated and... cheated? they felt. I thought it was something restricted to "us" (Brazil here), but it seems that leeches are a global issue :-/ <br />
    <br />
    I hope you're considering legal action against the book-keeper, as there is (IMHO, IANAL) a clear case of bad faith causing considerable losses.<br />
    <br />
    "They look upon fraud as a greater crime than theft, and therefore seldom fail to punish it with death; for they allege, that care and vigilance, with a very common understanding, may preserve a man's goods from thieves, but honesty has no defence against superior cunning (...)" Jonathan Swift: Gulliver's Travels

  2. Rand

    Rand on 12/14/2006 8:53 p.m. #


    Am glad to hear that there is a good probability that you never actually became a director. At the worst it places the matter into a grey area where it is much better to negotiate from. At the best there is nothing to negotiate because you do not owe any money.<br />
    Many years back I was involved in a tree-planting co-op. I put my house up as colateral on a performance bond. When the performance bond cleared the credit union wanted to hold on to the house as there were other debts that the co-op had, but they could not legally do so because the purpose of the colateral was clear. A friend was not so lucky though. Fortunately he was able to keep his house by paying a fraction of the amount owed.<br />
    Dealing with the goverment is a different matter than dealing with a financial institution. In some cases the auditors can reduce the amounts owed if it causes undue hardship. <br />
    I hope that the book keeper can no longer legally work as an accountant.

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