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fraud prevention - Complete Controller

Fraud impacts the standing of a company. It leads to financial loss and a load of legal fees. Companies must have a proactive approach to the solution for fraud prevention. Many factors are important for fraud risk management, but organization culture, strong internal controls, and behavior towards fraud are the main key points. Key solutions for effective fraud prevention are discussed below:

Develop a clear fraud policy:

The first step is the development of a clear and well-understood policy to prevent, detect, and penalize fraudulent behavior. This policy clearly describes the types of frauds and action taken. Check out America's Best Bookkeepers

Education and training:

Educate employees of your company’s fraud policy. Initial orientation and periodic training of your anti-fraud policy should be scheduled for new joiners and seasoned staff—train staff for detecting and reporting suspicious happenings.

Hire an asset:

Your front-line fighters against fraud are your employees, so screen rigorously before hiring.

Discrimination of duties and fixing responsibilities:

Segregation of duties is an integral part of internal controls. There should be clear segregation and authorization among the one who generates requisition, approval authority, and issuance authority. All critical documents, receipts, and contracts should be signed by more than one person of different positions. One single person should not have complete control of an area or activity. Multi-level persons should be involved as an approach to solutions to fraud prevention. Every worker should be accountable and responsible for his/her actions.

Surprise stocktaking:

Surprise and random stocktaking of financial transactions, fixed assets, and inventory, along with annual and quarterly audits, are an integral part of strong internal controls. Internal and external auditors identify the risk factors leading to fraud and point out the violation of procedures, which may result in fraud. The weakness of internal controls provides a favorable environment for fraudsters to commit wrongdoings. Check out America's Best Bookkeepers

Secure inventory and cash:

Inventory and finance area personnel are hired to manage fixed and non-fixed inventory and to handle cash transactions. Rigorous screening and homework are needed before hiring inventory handling staff. Previous service records and criminal history should be checked before hiring.  Access to inventory and cash storage areas must be strictly restricted.

In a small business, the owner should regularly check financial statements and payrolls themselves.

Documentation and restriction:

All transactions and processes must be documented. Accessibility to documents should be restricted.

Communication:

Regular interaction and communication between departments are crucial for fraud prevention. In many incidents, key stockholders are not aware of incidents happening in their corporation.

Watch over employee conduct:

Regular contact with under command staff and any change in their behavior also provide a clue to probable fraud risk. If an employee is not using leaves and putting in extra hours in your absence, keep an eye over him/her.

Listen to day to day issues of employees and show sensitivity to all minor complaints.

Use of technology:

The use of online systems can save transaction data from theft as well as disaster.

Security measures i.e., passwords and firewalls, must be applied to technology. Keeping your back-up file data in an offsite area as a part of preventive measures to fraud.

CCTV cameras should be installed in risk areas. Check out America's Best Bookkeepers

Anonymous reporting system:

The company must develop a hotline where vendors, customers, and employees can report fraud anonymously.

Assessment of fraud risk:

Managers should develop checklists for self-assessment and do the periodic review of a company’s fraud policy to analyze its validity.

Be a role model:

A positive working environment paves an approach to solutions to fraud prevention. Senior management should be the role model for their subordinates. Be honest and strict about company policies. Managers should not show carelessness or flexibility against any violation.

Work with CFE and CPA:

Work with a certified fraud examiner and certified public accountant to ensure implementation fraud prevention policies.

Conclusion:

Companies are at continuous risk of internal and external fraud. Prevention of fraud is an ongoing process. By applying effective measures, the risk of fraud can be minimized.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
prevent fraud - Complete Controller

Finding out that your accountant is misappropriating business funds is difficult. They have complete knowledge and intellect to rig your records and books. If you doubt that your accountant is up to no good and are looking to prevent the fraud, here are some tips for detecting those symptoms: Check out America's Best Bookkeepers

Warning Signs in Behavior of Employees

If an employee starts working in a disorganized manner or remains dissatisfied and withdrawn, these are signs that something is not going well. Remember that these types of behavior can occur for all sorts of reasons and not due to fraudulent activities alone.

 

If your accountant is someone who has private access to your company books, products, and properties, and he develops new habits such as coming to the office on holidays or working for longer hours, you should take note of if you want to know if someone is misappropriating business funds. Any of these signs are reason enough to keep a closer watch on the records and its handler to prevent the fraud.

 

Accountant in financial difficulties

Accountants resort to the misusing of business funds when they are under certain emotional pressure or stress, which forces them into committing this terrible activity. Addiction to drugs, gambling, divorce, and so on, are some key symptoms that can lead to financial difficulties and debt. Then, it does not matter whether the accountant is a senior, junior, young, old, a man or a woman; they would pose a potential threat to the business. Check out America's Best Bookkeepers

 

It is the right of every individual to live in big houses, drive expensive vehicles and savor lavish vacations, provided that they can justify their means with known sources of income. There are times when people can be seen as living beyond their means. Some of the most common signs are overspending, running up credit cards, borrowing more than what can be managed, and so on. All of these will cause financial strain and can lead people to resort to illegal activities, including misappropriating the business fund.

 

All Eggs in One Basket

If your accountant advocates entire control of all the financial and management functions, there is a good reason for you to work up contingencies for the prevention of the fraud. A person in charge of entering the bill should not be responsible for applying for payments. To ensure misappropriating business funds and prevent fraud, it is important to segregate duties and establish a system of internal controls. There are occasions when owners make it too easy for accountants to commit fraud.

 

Establishing Internal Controls

One of the most common methods of reducing the risk of fraud is to set up a system of internal controls. This means the separation of job duties. Whereas it is not possible to ensure complete prevention of the fraud and misappropriating business funds but spreading the risk can cause its occurrence to decline. It can make it difficult for frauds to embezzle and increase chances of getting nabbed even if they commit.

 

 

Segregation of Duties

The rule of segregation of duties is the foundation of a strong internal control structure. To prevent the fraud, separation of responsibilities includes dividing the basic responsibilities into the three essential bookkeeping and accounting functions between at least two representatives or offices. Check out America's Best Bookkeepers

 

It needs to be ensured that you dispense money related duties among different employees. The tasks must be delegated and not confined to one person; a worker who makes the bank reconciliation should not gather checks and money from the customers and the other way around. For instance, one individual can be placed accountable for accepting stock while another worker is allocated to taking requests. Furthermore, the individual accommodating the bank transactions ought to never be the one keeping its records and the checks.

 

Leveraging Outsource

Among all approaches, the best way to prevent the misappropriation of business funds is to outsource your accounting, bookkeeping, and control capacities to an accomplished firm. This takes out the dangers related to an absence of internal controls and guarantees that each transaction is checked for accuracy.

The truth of the matter is that the more individuals you have supervising your books, the fewer chances are that your organization moves towards becoming a target for frauds. So notwithstanding giving a lot of assurance, outsourcing likewise gives you significant peace of mind.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers