Fraud in the Workplace

One of the easiest ways to prevent your employees from committing fraud is to follow one of the basic accounting principles. That principle is separation of duties! So what is this you ask—it is simple actually. The person who handles the bills you owe should never be a signer on your checking account—neither should the person who handles the receipts you get from your clients. Where I work (and it did take a while since we didn’t always have enough employees in the accounting department) one person is in charge of paying the bills and doing wire transfers to those who require it-we now have 2 in the cash in section-one creates the bills to the client-the other records the checks. I as bookkeeper sign the checks and do the bank reconciliations. So who checks on me? Our outside accountant is not only a CPA he also has a MBA in fraud management. He calls himself a forensic accountant.

Now, what about internet sales? That is a tricky one---we have recently found out that when you sell overseas—the bill to and ship to HAVE to be the same. If they are not and it was fraudulent there is NO WAY the bank is going to refund your money—it happened to us ONCE—immediately I told everyone from accounting to shipping to NOT ship and to contact accounting. We now require a signature be faxed to us before we will ship to another country where the bill to and ship to differ!!

Obviously if you work for a small company it is almost impossible to separate duties. Just make sure that the person signing the checks is not the same as the person doing the bank reconciliations. If you are a one person business and you have to do it all yourself just remember that the IRS is getting better and better at detecting fraud. Paying a CPA to look over your books once a year will be well worth the money!!

All opinions expressed are my own honest opinions. For more information please check my Disclosure Statement.