Unscrupulous in-house bookkeepers have many ways to commit fraud. Fortunately, if you keep an eye on your books, as a business owner you have just as many ways to notice and stop fraud before the losses do unrecoverable damage to your business.
Regularly reviewing your Accounts Payable is the best way to stop fraud as it happens. Here are five things to look for in your ledger.
1. Transactions taking place in cities where you don’t normally do business. – If someone is cashing checks in a city where you don’t have any vendors, that could be a sign of a problem.
2. Transactions that are higher or lower than usual. – Employee theft can take place in small increments; the criminals may think small amounts won’t be noticed but, over time, they can add up. In other cases, excessively large transactions could indicate a theft.
3. Adjustments at the end of the month. – When it comes time to close the books at the end of the month, a bookkeeper may try to hide signs of fraud by making adjustments to account for shortages.
4. Transactions that have no supporting documentation – Any transactions without a receipt can be a sign of fraud. They might also be a sign of careless employees who forget to keep their expense account receipts. Employee fraud often occurs with petty cash or expense accounts, though, so make sure to adhere to strict rules that all employee expenses must be accompanied by a receipt.
5. Odd employee behavior – Employees who quit without warning, or notice, could be a sign of a problem. Fearing being caught, a bookkeeper may quit without warning. A bookkeeper who refuses to take a vacation can also indicate a problem. Bookkeepers who are stealing don’t want anyone else in control of the books.
Accounting Fraud Too Much to Think About?
Accounting fraud can be one of the worst things that can happen, financially, to a business. The only way to avoid it is with checks and balances, multiple accounting staff members who follow proper processes and procedures and review each other’s work.
AccountingDepartment.com is structured so that our clients receive the services of a complete virtual accounting team, including a full-charge bookkeeper and a financial controller. We have the utmost security procedures, as well as explicit hiring standards, that prevent fraud at every level.
If you’re starting to feel out of control of your company’s financial statements, and your financial future, why not give us a call to see how we can help you?