Allowing fraud or embezzling of funds in a company may bring down the establishment if caution is not taken. Fraud is common among staff dealing with finances in any organization. Small or big businesses are prone to fall prey to this swindle if they do not have a policy or system in place to prevent it. Find below some tips to adopt to protect your business from unethical staff members:

  1. WATCH YOUR INCOME RECEIPTS- More than one person or employee should be involved in counting or verifying incoming receipts. Make sure all incoming cheques are duly endorsed. Buy a “for deposit only” stamp and use it on all incoming cheques.This will prevent an employee from cashing them. You should personally investigate customers’ complaints that credit has not been received for payments. Get a copy of the front and back of the customers’ cheque and be sure it was deposited in your business account.
  2. LET YOUR ACCOUNTING EXECUTIVES OR ACCOUNTANT TAKE VACATION OR ANNUAL LEAVE-Any employee embezzling from you may need to make unbroken effort to conceal his act of stealing. Many small business owners are surprised to to discover loyal employees who never take vacations and never stay home-sick-are really stealing from them. The reason for these people to be in the office uninterrupted may be to cover a complicated ‘transaction’. Make it compulsory those employees who perform accounting/bookkeeping take vacation every year and should be at the end of month when the books are closed. Let a neutral person at this crucial period review your books and scout for discrepancies.
  3. CHANGE YOUR EXTERNAL AUDITOR WITHOUT NOTICE-There is the tendency that your regular or known auditor must have been compromising with your books. It is possible that he or she ,owing to familiarity with the staff has been shielding them whenever the exercise takes place with a cash reward. Call for a neutral person abruptly once a while. It is not easy to compromise with a total stranger. Don’t let the audit comes the same time every year; it should  be unscheduled and a surprise
  4. BE FAMILIAR WITH YOUR ACCONTING RECORDS- Frauds commonly occur when you do not supervise your accounting books. This makes it easy for an accounting officer to keep cash and receipts. As an entrepreneur, you must be familiar with your company’s bookkeeping and record keeping system. Let your accountant show you what you should look for or go for a remedial training or bookkeeping class for you not to be in the dark. Do not completely trust someone else to oversee this vital part of your business. By this, you can easily review the books and make sure nothing is amiss.
  5. PROTECT YOUR ACCOUNTING SOFTWARE- Restrict your accounting software to only the officer in charge. Password the computer and the software and don’t put the computer that holds your books on your network.
  6. CHANGE YOUR PASSWORD FREQUENTLY-Don’t be careless with your company cheques. Keep them in a locked drawer or cabinet and don’t give out the key. Use pre-numbered cheques and check for missing cheque numbers frequently. Have a “voided cheque” procedure in place that requires you (the owner) to validate all voided items. Request all cheques above nominal amount to have two signatures(one of which is yours). Do not ever sign a blank cheque.
  7. ENDORSE EVERY PAY ROLL CHEQUES PERSONALLY- Scrutinize the cheques to be sure you know all the people. If you doubt a name on a cheque, secretly hunt for the person and keep a weekly count of the number of people on your pay roll and match it against the number of cheques you have. Be sure changes are not made to the company’s payroll master file without your approval and signature. You can also have a separate account for payroll and deposit the exact amount on your payroll in that account. Do a prompt monthly reconciliation.

8.COLLECT YOUR BANK STATEMENTS PERSONALLY-If this is possible(though may be stressful) get your monthly bank statements personally  as pre-arranged with your banks. Study the cheques meticulously. Examine the payees, signatures and endorsements on each cheque. Keep an eye out for likely fraud such as:

  • Cheques where the payee listed does not match with the name in your register
  • Signatures that look forged
  • Missing cheques, or cheque numbers that are b out of order
  • Cheques made out to cash that are larger than the amount you allow for petty cash
  • People you don’t know or cheques to suppliers
  • Cheques made out to a third party but endorsed by someone in your company.

By –Chinwe Nkem

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2 thoughts on “HOW TO PREVENT FRAUD AMONG YOUR STAFF”
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