Fraud…theft by your employees from your hard earned revenue. It seems like you read about it more and more in the news each day. Read on to learn some suggested safeguards from our Manager II, Kathy Flattmann, on how even small companies reduce the fraud risk.
The first step would be to question your own internal controls…procedures put in place to help prevent fraud…even for businesses with limited staffing resources. Businesses with fewer employees often have higher percentages of fraud instances compared to larger companies.
One key step to mitigate fraud risk is to segregate duties. That is, to assign various steps in your transaction and money handling process to different employees. How does a small company do this? Consider enacting the following segregation steps involving cash.
- Separate between two staff members the duties of reconciling the bank accounts and the approving adjustments to cash or receiving payments.
- Assign the individual who receives payments to prepare a list to be used to post receipts in the accounting software by another person. Additionally, the individual who receives cash should not be allowed to create customer credit memos.
- Then then business owner or another responsible person should review all checks and initial the related source document before payments are sent out. The signed checks should be mailed out by someone other than the employee responsible for preparing them.
Need help? We would be happy to review your internal controls and suggest a manageable system to assist with your fraud prevention. Click here to get in touch with us.