by Fraud Expert, Ed Martin
6 Tips to minimize fraud risk:
- Protect your money: Have company bank statements sent to the home of the business owner, not directly to the office, to demonstrate that you are paying attention to the company finances.
- Review the statement and ask questions about several items on the statements to ensure the employee knows you are watching, which will reduce the opportunity and increase the risk of being caught. Require monthly reconciliations and review them monthly looking for checks that cleared and those outstanding.
- Have a third party, perhaps an accountant, or forensic accountant review internal controls, segregation of duties, and suggest changes.
- Segregate Duties: Separate the cash / banking function from the recordkeeping function. If not possible, then cross-train employees and on a regular basis rotate personnel in critical functions. The owner should review the list of payables before payment. Invoices and supporting documents must be reviewed and they must be initialed and dated prior to authorizing checks to be printed.
- Restrict access to Payroll Master Files to prevent “ghost employees” from being inserted and improper pay rates. The owner should sign the payroll checks and / or review the Payroll Journal to understand who receives payments from the company. Also, restrict access to Vendor Master Files and create procedures to control additions and modifications.
- Use background checks and review hiring policies to keep people of questionable backgrounds from being hired. A Reputable Private Investigator can provide criminal and civil background checks including tax liens, judgments, and bankruptcy.
To learn more contact Fraud Expert Ed Martin, CFE, TCI, at Sage Investigations, LLC, e-mail: firstname.lastname@example.org