Prevent and Detect Fraud to Protect Your Bottom Line

Thanks to Vanacore CPA’s for raising this topic in their recent newsletter.  We wanted to share it with our supporters:  Fraud prevention and detection is the not the most comfortable of topics to address with your team, but it is crucial to cost efficiency.  Just setting the right tone of doing business with character and integrity can be powerful.  As an owner you should express your views to employees that fraud, in any form, is not acceptable. A few more suggestions to forward the mission:

  • Encourage employees to make suggestions about ways to improve controls. This will also conveying the fact that you are alert to the possibility of fraud occurring and serves as a good deterrent.
  • Require that all new vendors be approved by you, prior to checks being cut. Review the listing of vendors on a monthly basis to ensure this procedure is being followed.
  • Establish mandatory vacations for all employees; this will allow another individual filling in for that position to notice if anything improper is occurring.
  • If you, as the owner, do not sign checks, require that all checks over a certain dollar amount require your signature, i.e. $1,000.
  • Receive unopened bank statements directly and review the activity. Pay particular attention to the payees on cancelled checks and where wire transfers are going.
  • Do not allow expense reports to be submitted too long after expenses occurred because it allows too much time for the individual in a supervisory role to forget the details.
  • Receive and review unopened payroll reports directly to ensure there are no fictitious employees and that legitimate employees are being paid at their proper rate.

With each measure, put the emphasis on the concept of teamwork.  This will work especially well if individual compensation is somehow tied in the overall success of the company—make A fatter bottom line better for everyone.

by Judith

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