A practical guide to bookkeeping ethics—integrity, documentation,
segregation of duties, security, and month‐end controls—so you can prevent errors and fraud and stay audit‐ready.

What Are Bookkeeping Ethics? A Practical, No‐Nonsense Guide for Owners & Operators

A GTB long‐form guide

Ethical bookkeeping isn’t abstract—it’s the set of everyday behaviors and controls that keep your numbers accurate, trustworthy, and audit‐ready. Done right, it protects owners,
employees, customers, donors, and vendors. Done poorly, it invites errors, penalties, fraud
risk, and bad decisions.

Below is the GTB playbook you can implement immediately—whether you’re a startup, a
service‐based business, a Chiropractic/Medical office, or a Non‐Profit.

Why Bookkeeping Ethics Matter (In Plain Business Terms)

• Decision quality: Strategy is only as strong as the numbers behind it.
• Compliance & penalties: Clean books = smoother tax prep; poor controls = fines and rework.
• Cash protection: Ethical controls stop leakage (duplicate payments, fake vendors, card misuse).
• Reputation & funding: Donors, lenders, insurers, and partners look for discipline and transparency.

The Core Principles (What We Stand On)

• Integrity – Be truthful and complete. Never manipulate timing or categorization to
“polish” results.

• Objectivity – Record what happened, not what someone wishes happened. Avoid
conflicts of interest.

• Professional Competence & Due Care – Use the right methods (GAAP‐style where
applicable), keep learning, and document your work.

• Confidentiality – Protect sensitive data (PII/PHI, payroll, banking, donor lists).

• Professional Behavior – Follow laws, regulations, and internal policies; act with respect and diligence.

GTB Rule of Thumb: If you wouldn’t want a regulator, auditor, donor, or major customer to see it, don’t do it.

Practical Controls You Can Put in Place This Month

1) Access & Permissions

• Grant least‐privilege access (only what each role needs).
• Separate the ability to approve, pay, record, and reconcile.
• Review user access quarterly (remove ex‐staff immediately).

2) Approvals & Segregation of Duties

• Purchasing: Request → Approve → Pay → Record → Reconcile (different people or
tools at each step).
• Revenue: Issue invoices → Receive payment → Deposit → Record → Reconcile
(separate where possible).
• Small team workaround: Use cloud approvals, require two signers for high‐value
payments, and have your CPA/virtual controller reconcile monthly.

3) Documentation Standards

• Every transaction should be supported (invoice, receipt, contract, PO, approval).
• Attach documents to transactions in your accounting system.
• Keep vendor W‐9 forms and customer contract/engagement docs on file.
• Create a short documentation policy—what to save, where, and for how long.

4) Audit Trail & Close Discipline

• Reconcile bank, credit card, loans, and merchant accounts every month.
• Close and lock the period (use a closing date password in QuickBooks Online).
• Avoid deleting posted transactions; correct via adjusting entries with clear memos.
• Keep a Month‐End Checklist and initial/date each step.

5) Vendor & Payment Hygiene

• Centralize vendor setup; require W‐9 + verification before first payment.
• Watch for new vendor names that look like existing ones (common fraud pattern).
• Turn on Positive Pay/ACH filters at the bank when available.
• Use virtual cards or spend controls for recurring SaaS and small purchases.

6) Data Security

• Enforce MFA on bank, payroll, and accounting logins.
• Use a vetted password manager; no shared passwords via email.
• Encrypt devices; restrict downloads of bank data to secure locations.

• For medical offices, ensure HIPAA‐appropriate workflows and BAAs where required (consult counsel).

7) Compliance (High Level)

• Maintain records per IRS/state rules (commonly 3–7 years; payroll/grants may
require longer).
• Track and file sales/use tax accurately; keep exemption certificates.
• For contractors, track payments and tax IDs; file appropriate year‐end forms (e.g.,
1099‐NEC).
• Non‐Profits: tag restricted vs. unrestricted funds; document donor intent and grant
reporting.

Handling Errors & Corrections (The Right Way)

• No backdating to hit targets—post in the correct period whenever possible; if a prior
period must change, document what/why/who.
• Adjust, don’t erase: Use adjusting journal entries with memos and attachments.
• If you suspect fraud or pressure to misstate, escalate to ownership/board/CPA
immediately and limit involved users’ access.

Red Flags That Deserve Immediate Attention

• Vague requests to “recode” expenses to change profit optics.
• Repeat out‐of‐policy reimbursements (e.g., personal spend).
• “Rush” payments to new vendors or last‐minute bank changes via email.
• Gaps in documentation (“We lost the receipts”).
• Reconciliations not completed—or done by the same person who initiates payments.

Month‐End Ethics Checklist (Copy/Paste & Use)

• [ ] All bank/credit/loan/merchant accounts reconciled
• [ ] AP/AR aging reviewed; unusual balances investigated
• [ ] Payroll entries posted & tax payments confirmed
• [ ] Revenue completeness test (sample invoice‐to‐deposit trail)
• [ ] Expense documentation attached (spot‐check)
• [ ] New vendors verified; W‐9s on file
• [ ] Adjusting entries include memos + attachments
• [ ] Period closed & locked; backup/export stored securely
• [ ] KPI snapshot prepared (gross margin, DSO, cash runway)
• [ ] Access/user changes reviewed; offboarding completed

Small Team? Here’s a Minimal Segregation Map

• Owner/Director: Approves bills over threshold, reviews bank statements, signs
checks/wires.
• Bookkeeper (GTB): Codes transactions, prepares payments (no release authority),
reconciles, closes, reports.
• CPA/Controller (GTB): Reviews month‐end, posts complex adjustments, oversees
compliance & tax planning.

If you only have one internal staffer, keep payment release (bank) with the owner and
reconciliation with GTB. That single separation blocks most fraud.

Ethics Policy Template (Drop This Into Your Handbook)

Our Bookkeeping Ethics & Controls Policy

• Accuracy & Integrity – We record transactions faithfully and on time.
• Objectivity – We do not alter timing or classification to misrepresent performance.
• Confidentiality – We safeguard financial and personal data; we use secure systems.
• Segregation of Duties – Initiation, approval, payment, recording, and reconciliation are separated wherever possible.
• Documentation – Every transaction has support attached in our system.
• Audit Trail – We reconcile monthly, retain records per law, and lock closed periods.
• Corrections – We correct via documented adjustments; we do not delete history.
• Escalation – We report suspected fraud/pressure to misstate to ownership/board/CPA immediately.
• Training – We maintain the skills to perform our duties and follow this policy.
• Review – We review access and this policy at least annually.

Key Takeaways

• Never back‐date or fabricate entries to “fit a story.”
• Separate who authorizes payments from who records/reconciles them.
• Use secure portals & MFA; avoid sharing credentials by email.
• Document everything and lock closed periods to protect your audit trail.
• For small teams, lean on cloud approvals and outside review to keep duties separated.

The GTB Advantage: Ethics Built Into Every Workflow

• QuickBooks‐Certified team with Senior Tax Accountant on staff
• Flat‐rate, merit‐based pricing (not unmotivated hourly work)
• Nationwide, 100% remote, with secure document intake & approvals
• Month‐end close discipline, reconciliations, KPI dashboards, and books‐to‐tax under one roof.

Ready to harden your controls and keep your books audit‐ready—every month?

Schedule your free consultation: SCHEDULE NOW
Or call 971‐200‐5158.

Giesler‐Tran Bookkeeping • gieslertranbookkeeping.com • 971‐200‐5158