The ERPodcast

Episode 33 QuickBooks Costs the State Department $657-thousand dollars, thereby avoiding expensive ERP options.
. BREAKING NEWS - In this week’s episode of the ERPodcast, we examine a QuickBooks system that ultimately cost the State Department $657-thousand dollars. We’re reporting on a source document - a May 1 Department Of Justice Press Release, and additional reporting - links are attached below. Upfront Summary – many accounting teams choose QuickBooks, but lack of security features are an incredible risk, plus the unseen costs mean QuickBooks is ultimately more expensive than entry-level ERP software – examples to follow. So QuickBooks cost the US State Department $657-thousand dollars. And wait, you’re saying, QuickBooks software was available at Costco for like $300 just a year or two ago – QuickBooks is now mostly deployed Online, and the licensing price is around $120 a month, plus users. That’s the price. But Then there’s the Cost! Two different things. We talk about it today. I’m Gene Hammons, Founder and Managing Director of an ERP Consulting team called ProfitFromERP. Here’s the news We first started tracking this story after Fox News Evening Anchor Elizabeth MacDonald broke a Sunday a week ago about a US State Department Budget Analyst who embezzled over $657-thousand dollars in a two-year period. We confirmed the reporting through a half dozen sources, including the source document, a DOJ Press release - links below. According to all the reports, Senior Budget Analyst Levita Ferrer, pled guilty and admitted writing 63 checks to herself over a two year period March of 2022 to April of 2024. The checks totaled $657-thousand, three hundred fourty seven dollars and fifty cents. She did it with signature authority and standard access on the QuickBooks system used to issue State Department checks. Her particular M.O. was reported as her writing checks to herself, depositing them in her account, then going back into QuickBooks and changing the payee name on the check screen – deleting her name in this case – changing that to one of the State Departments’ regular vendors. And who would be the wiser. Hey – it’s another check paid to our regular vendors. It worked, for over 2 years. QuickBooks has long been known for allowing users to simply edit information. It’s built in as a feature, making it easy to use. No adjusting entries. Just highlight, delete, revise, change, - no audit trail, go wild. Apparently, Levita did. As we hear in the news these days, Government spending is wide open, oversight is lax, and everyone is playing very loose with government funds. According to Capital Hill News, there’s over 2,000 QuickBooks instances in use across different departments of the federal government. 2,000 situations where users can simply delete information they don’t want anyone to see. 2,000 situations where you can’t segregate duties what financial analysts can access – everybody has access to everything. But why would anybody use a QuickBooks system where fraud and deleting evidence is so easy? The truth is, millions of US small to midsized companies use QuickBooks because of it’s low purchase price, but they don’t realize the true cost. This isn’t the first ERPodcast to highlight some of the risks of Quickbooks, we’ve been talking about it for years. See, it can be a rational decision to pick Quickbooks, easy, simple, dirt cheap. ERP software starts at 50K, then there are implementation services, consultants charging $250 an hour. And we’ve seen some really stellar CFO’s say all they need is QuickBooks and spreadsheets, or Power BI or other outside tools to run a $50m corporation. And they’re right. They can make it work But the reality is, while there’s prices you can see, there are hidden costs to QuickBooks. A lot of hidden costs. In this case, it cost $657k. But that’s only ONE of the costs. When your software can’t run a P&L (a profit and loss report) on each of your customers, you know you make money at the end of the month,