Bookkeeper being asked to record owners’ personal expenses as COGS. How concerned should I be?
Looking for some advice from Canadian accountants/bookkeepers because I’m in a situation at work that isn’t sitting right with me.
I do the day-to-day bookkeeping for a privately owned company. Occasionally, the owners purchase materials/supplies through the company that are actually for their personal homes, things like materials, home improvement supplies, etc.
I’ve been instructed to record these purchases as COGS along with our regular business materials. I’m also required to keep a separate physical record of the personal purchases. So far this fiscal year, the personal purchases I’ve tracked are around $25,000 collectively.
What concerns me most is that I’m not supposed to identify these purchases as personal to the company’s accountants or in the accounting software. As far as I know, they remain recorded as COGS. I’m not aware of them being recorded to shareholder loan accounts, reimbursed to the company, or otherwise reclassified, although I don't have visibility into everything that may happen when the corporate tax return is prepared.
I’ve raised concerns internally before and they’ve essentially been brushed off, so I’m trying to understand my own responsibilities as the employee entering these transactions.
My questions are:
Is recording known shareholder/personal purchases as COGS acceptable at any point, or should they be recorded to a shareholder loan/due-from-shareholder account from the beginning?
If they remain in COGS at year-end, what are the potential corporate tax/GST implications?
As the employee/bookkeeper who has been instructed to enter them this way, could I have any personal professional or legal exposure?
Is keeping a separate record of the personal purchases enough, or should I be doing something differently to protect myself?
Who would be appropriate to speak to confidentially about this without immediately escalating it to CRA or the company's accountants?
I’m not looking to report my employer or make accusations. I genuinely want to understand where my responsibility begins and ends because I’m uncomfortable continuing to record transactions I know are personal as business COGS without
understanding the implications.
Would really appreciate input from Canadian CPAs, bookkeepers, or anyone who has dealt with a similar situation.