News & Events

Fraud Prevention Steps for Challenging Times

Published on Tuesday, June 1, 2010

After two or three years of downsizing and rightsizing in the face of economic pressures, many companies today find themselves “lean and mean,” with tight staffs where fewer employees are being asked to handle more tasks and responsibilities.

While this may be a good model in terms of lowering payroll and increasing productivity, it can be a bad one when it comes to fraud prevention. One of the best ways to deter fraud is to segregate duties by spreading financial responsibilities among several different employees. When just one or two employees are responsible for all accounting and financial management tasks, it becomes much easier for them to commit fraud and embezzlement.

It is more critical than ever that you take an active role in reviewing and monitoring every aspect of your business finances. Pay particularly close attention to these three areas:

  1. Receivables: Compare actual cash receipts to your accounts receivable records on a monthly, if not weekly, basis. Be on the lookout for credit memos that seem out of the ordinary. Separate employees should receive/post and deposit checks.
  2. Disbursements: Do not use a check stamp; instead, personally sign all checks. Also open and carefully review all bank statements instead of delegating this to a bookkeeper. This will help prevent employee tampering with checks after you’ve signed them.
  3. Payables: Create an approved vendor list and compare all payables against it. Require that any changes to the list be detailed in an exception report. When reviewing your bank statement, look for unfamiliar vendor names and check amounts that seem unusually high.

We can help you implement internal controls like these in your company. Call us today. 401-331-0500