Fraud Checklist
“Fraud is a potential threat to every company, including small and medium entities. The risk of fraud can be managed. The following is a checklist of simple and affordable measures on managing the risk of employee fraud, including some technology-based measures that can be adopted when the threat of fraud is higher.
- Accept the idea that fraud is commonplace and can happen at any business.
- Set an appropriate ethical example for employees to follow, and treat them with respect and fairness, including fair play.
- Ask your employees to identify ways in which someone could commit fraud at your company and the ways to avoid it.
- Develop a code of conduct that explicitly prohibits employees from committing fraud, conflict of interest and other illegal acts. Ensure all employees, vendors and customers get copies of it. Consider having key employees provide annual confirmations of their compliance and have a clear company policy on time and expense reporting.
- Adopt a “trust, but verify code”. If you need only one bookkeeper, conduct a careful background check before hiring. Take note of employees who appear to live substantially beyond their means.
Verify the credentials of all new vendors before they are authorised to supply the company. Periodically review vendors to identify possible improprieties. - Make sure all disbursements are properly approved.
- Protect yourself against cheque alterations by adopting electronic transfers for large payments, using direct deposit for payroll, placing a financial limit on cheques and implementing up-to-date cheque security measures.
- Review original bank statements before your bookkeeper does. Keep an eye out for unexpected overdrafts or declines in cash balance.
- Make sure bank statements are reconciled each month and that an expert adviser, such as your accountant reviews the bookkeeper’s work periodically.
- If something seems odd, whether it is a disbursement to an unfamiliar vendor or unexpected costs, consider the possibility of fraud.”
