Tax Minute

PREVENTING FRAUD (1)

A recent report by the Association of Certified Fraud Examiners states that the typical business will lose an average of 7% of revenue from employee theft alone. Therefore, all this week we're going to be talking about ways to prevent fraud at small businesses. The most important step in preventing fraud at your small business is segregation of duties. Someone that is in control of the accounting software at the business, has the ability to write and sign checks, and is the person that receives the bank statements for reconciliation will almost invariably end up stealing money from you. One of the easiest things to do to prevent fraud in a one person accounting department is the small business owner should receive the unopened bank statements prior to giving them to the bookkeeper. By scanning through all of the entries on the bank statements, to include a visual inspection of the checks that were written, most small business owners will be able to prevent the vast majority of the fraud due to the lack of segregation of duty in their accounting department. I also recommend that the small business owner should be the only person with check signing authority and if you have a stamp with your signature on it, destroy it now.

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