Anti-Fraud Resolutions

I know, I know. You don't need any more New Year's resolutions, right?

That's what my latest client thought. I'll call him TJ. He hired the "perfect" bookkeeper to mind his accounts. She had a "great" background, she was personable, and she was accountable (i.e. she came to work on time everyday!).

She was also an experienced fraudster.

The first month she worked for him, she deftly pocketed $500. By the fourth month of employment, she was on the take for over $5,000.

The fraud investigation piece of my practice is growing steadily. The majority of these frauds could have been immediately detected by any number of the following Internal Control Best Practices.

Implement them in 2011.

You won't be sorry.

1. I WILL REVIEW BANK STATEMENTS AND CANCELLED CHECKS
The majority of all frauds are cash schemes that can be found by a thorough review of the bank statements AND cancelled checks.

2. I WILL SEGREGATE ACCOUNTING DUTIES
Even if resources are limited, this can be accomplished.


3. I WILL PAY FOR A PROFESSIONAL BACKGROUND CHECK ON ALL NEW EMPLOYEES
The client mentioned above? A simple google search would have detected anomalies in the candidate's resume. A background check would have uncovered a non-existent college degree AND a criminal history COST? $79

4. I WILL ASK QUESTIONS AND DEMAND DOCUMENTS
Perception is key. Ask questions, ask for documents. If your employees know you are double checking, they are less likely to steal from you.


Reminder to my CPA friends: are you talking to your business-owner clients about these simple, yet effective anti-fraud steps during annual tax appointments?