As a business owner, you cannot fully trust internal control and audit of your business accounts fully especially if you are just growing or you have not placed necessary structures on ground. This article will help you to checkmate any form of fraud already in your business and it will also help you to avert any form of fraud.

Ways To Reduce The Risk Of Fraud In Your Business

  1. Review The Bank Statement Yourself

It is important for you as a business owner to always take a quick scan of your bank statements everytime, this will make you saty updated with how money is being spent and possible discrepancies.

Make sure to look for any red flags and review authorized payee and signature, and electronic payments approved.

Make this check weekly and have a detailed review monthly.

  1. Do Not Allow Your Book Keeper Reconcile The Bank Account

You bookkeeper is the employee that releases your money and pays for things, if he is also the one that does your reconciliation, it will be difficult for you to checkmate embezzlement, As the bookkeeper have the knowledge and ability to manipulate your financial records and books.

  1. Do Not Allow The same Person That Does Your Accounting Work To Have Assess To You Official Mail For Alerts And Checks

This is important because this person can take out funds in the account and cover his/her tracks before you will eventually notice, but with you and some other trusted people having access to the mail, you can easily see how your funds are coming and going.

  1. Don’t Let The Person Who Does Billing Make The Deposits

The person who does the billing should not also be the person who deposits checks. Someone who does both can endorse a check to themselves and delete the original invoice. You can avoid this by separating duties so that the person who does the billing is not the same person who is making deposits.

  1. Automate Bill Payment To Reduce Billing Fraud

Automation not only reduces fraud, but it also saves money and time in businesses these days. Manual pay is always costly and time-consuming.

A popular form of billing fraud is when an employee submits personal, padded, or completely fake invoices for goods or services to the employer. Some employees will even go so far as to submit invoices from fictitious companies they have created. Another tactic is to submit bills for personal items the employee purchased to write off as a business expense.

If one person creates invoices, they should not also apply for payments in the accounting system.

  1. Have An Accounting Policy Manual

Building a system of internal controls

Control activities are the policies and procedures that ensure management directives are carried out. They usually involve two elements:

A policy that prescribes what should be done

The procedure to implement the policy

Have a policies and procedures document in place that lists all the requirements and expectations of employees. Have employees sign off, acknowledging their understanding of what is expected of them within your organization.

Fraud Prevention Checklist for Your Small Business:

Does management set the right tone by setting the right example and enforcing a zero-tolerance policy?

Do your employees understand what constitutes fraud? Is it clearly defined in the employee manual?

Do employees believe they can speak freely when they suspect fraud is being committed?

Do they know where to go for advice? Do you have a way for employees to report potential fraud?

Are performance goals realistically attainable for your employees?

Are anonymous surveys conducted to assess morale?

Has a system of internal controls been put in place?



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