Fraud Prevention and Detection

What are you doing to protect yourself from fraud, theft - including identity theft and embezzlement?  Are you doing enough to protect yourself?  Do you even know if you have any controls in place?

These questions are meant to upset anyone or to ridicule anyone.  These questions are to get you to evaluate your current situation and to think about the risk that your company is at, and to do something about it.

Often I get calls from people who want things done in their office such as simple accounting, setting up a new accounting program, covering for someone who is out sick, training new staff or many other reasons.  During those times when I am in their office, I do a little check to see what controls are in place to prevent financial risk.  Sometimes, things just fall out in the open because they are so blatant and other times, it is not until I have been there a short time that things start to fall out.

None the less, these things should (most of the time) have been obvious to the management or owners with a few controls in place.  With proper Policy and Procedures in your office and with strict adherence to those Policies and Procedures, it would be obvious.

Some of the most obvious things to look out for or to look at include:

• Not allowing the same person who writes your checks to sign those same checks,
• Not allowing the same person to open and reconcile the bank statements who writes or signs checks,
• Making sure that all charges on company credit cards are truly for company business and having all receipts verified,
• Viewing thumbnails of all checks on your bank statement each month
• Reviewing charges and EFT purchases on your statements each month
• Keeping a file of voided checks, a list of lost checks, a list of checks that you have put a stop payment on,
• Keeping all signature stamps under lock and key where only you have access to -- never the person writing checks,

There are so many things that you need to be aware of and if you are the owner an not the one doing all of these tasks (which I hope you are too busy making money to do these things), then you need to make sure that these things are being done and that there are cross checking procedures in place and being followed.

In the event that you do have an issue of employee dishonesty, your insurance carrier will ask you what you were doing in your business to prevent fraud or theft.  It is YOUR responsibility to protect yourself and the insurance carrier against loss where possible.  

Check your coverages and make sure you have employee dishonesty in place under your insurance policy.  Also, make sure you are doing your part to prevent loss.  If you need help, ask -- I do this all the time for people.  Protect yourself -- this is important for your bottom line.

Charlene S. Reed, Owner/Author

www.MyConstructionOffice.com