Accounting Fraud Prevention
Theft is a graduated crime…
Most employee theft starts out as small, almost unnoticeable things,and eventually gravitates to larger and more flagrant theft. Here are some examples:
- An employee starts writing checks out to "cash" for pocket money, and small checks to friends posing as vendors. This eventually escalates to purchasing cars, boats, jewelry, real estate, and family vacations, on company accounts.
- Using a company Credit Card, the employee purchases personal office supplies. This eventually escalates to paying for personal vehicle gas fill-ups, extravagant night out on the town, and vacations to exotic locales.
- A data entry clerk gives themselves an unauthorized raise. When Payroll is run this person may also give themselves large bonuses.
- An employee uses the companies shipping accounts to send themselves or others cash or checks. Variations on theis theme might also involve drug distribution and/or money laundering operations.
Some ways to help prevent accounting fraud are:
- Lock-up your checks, preferably in a safe with limited access.
- Keep a manual register of all check numbers, and use a different range of check numbers for manual checks.
- Accounts Payable and Payroll data entry persons should not be the ones who actually runs the checks or does manual checks.
- The person who writes the checks should not be the one who is reconciling the bank statements.
- Credit Card statements should be reviewed monthly.
- All banking correspondence should go to the company CEO and be reviewed as soon as possible after it is received.
- Routinely audit UPS and FedEx statements for questionable activity.
If you suspect that you may have some fraudulent activity going on in your business, and need assistance documenting this, please contact the CCS Retail Systems Support department.