Fraud Prevention Checklist for Small to Mid Size Businesses
As businesses are going through a difficult period, due to the recession I strongly advise you to carry out the following 10 Point Checklist to Prevent Fraud.
- Set an appropriate ethical example for employees to follow, and treat them with respect and fairness, including fair play.
- Ask employees to identify ways in which someone could commit fraud at your company and the ways to avoid it
- Develop a code of conduct that explicitly prohibits employees from committing fraud, conflict of interest and other illegal acts. Ensure all employees, suppliers and customers get copies of it. Consider having key employees provide annual confirmations of their compliance and have a clear company policy on time and expense reporting.
- Adopt a “trust, but verify code”. If you need only one bookkeeper, conduct a careful background check before hiring. Take note of employees who appear to live substantially beyond their means.
- Verify the credentials of all new vendors before they are authorised to supply the company. Periodically review suppliers to identify possible improprieties.
- Make sure all disbursements are properly approved.
- Protect yourself against cheque alterations by adopting electronic transfers for large payments, using direct deposit for payroll, placing a limit on cheques and implementing up-to-date cheque security measures.
- Preview original bank statements before your bookkeeper does. Keep an eye out for unexpected overdrafts or declines in cash balance.
- Make sure bank statements are reconciled each month and that an expert adviser, such as your accountant, reviews the bookkeeper’s work periodically.
- If something seems odd, whether it is a disbursement to an unfamiliar vendor or unexpected costs, consider the possibility of fraud.
If you are concerned about Fraud, we offer a review of your accounting procedures. Give us a call today, to find out how we can help you.