Tips for Preventing Business Fraud
These won’t protect you 100% against fraud, but they’ll sure make it likely someone’s financial theft will be discovered. Here are some internal control tips for preventing employee theft and fraud in your business:
1. Drug test every new employee.
2. Run a background check and talk to references on every new employee.
3. Assign the tasks of opening the mail, entering deposits into the books and taking checks to the bank to three different employees, if possible. The person opening the mail should make a list of checks arriving. The list should be compared to the deposit record on the bank account.
4. Review each payroll journal and sign distribute payroll checks. If you delegate that, you have to ensure you delegate to a trusted employee. Ensure you know every employee, if possible.
5. Review bank statements, including enclosures, and reconciliations. If you don’t know what to look for, get help.
6. Review, compare to the bill and sign accounts payable checks. Know who the checks are written to.
7. If your business handles cash, bond employees handling cash.
8. Read the general ledger, understand the transactions and compare the bank account balances to the reconciliations.
9. The Report to the Nation on Occupational Fraud and Abuse, published by the Association of Certified Fraud Examiners, reports that 7% of corporate profits are lost to fraud. That translates to $994 billion in fraud losses. Don’t let your business be part of that statistic.
If you don’t know how to protect yourself, get help. We can help you institute a fraud prevention program in your business.
