Both small and large businesses are vulnerable to fraud. There are a number of different accounting frauds that a business owner can become a victim of. The different levels of fraud can greatly hurt a business and cause major damages that some companies cannot recover from and will eventually fail. However, with a good accounting and bookkeeping service, fraud can be detected before major damages can occur. Mark Dicus & Company will share a few ways you can prevent being a victim of financial fraud.
Biggest Corporate Frauds
There are different ways a business owner can become a victim of financial fraud. An employee, customer or partner can take advantage. Theft can be done and hidden by financial statement fraud, asset misuse, or misappropriation of assets. Theft occurs by directly stealing cash, filing false claims, and stealing property to resell later. As theft can occur so easily in a business, it is important to know how to prevent it. Start by using some of these steps and strategies to prevent fraud and theft in your business.
Segregate Accounting Duties
Regardless as to the size of your business, it helps to prevent financial fraud by having more than one person handling your books. When one person is in control of bookkeeping, it makes it easier to commit fraud. No one person should be in control of reporting the client receivables, processing client payments, paying invoices, and handling the petty cash. You will want to have at least two or more people handling the books. It is recommended to use a professional accounting and bookkeeping service as they don’t gain from stealing from their clients and have a number of systems in place to monitor in house fraud.
Know your Employees
As it is the priority for every business to hire honest and trustworthy employees, it doesn’t always happen. When hiring a person, often there is an intense hiring process to get to know a potential employee. However, even that is not enough. If your business deals with a lot of loose cash or valuables, consider doing employee background checks. This will help reveal any criminal history and you will know if they can be better trusted.
Importance of Financial Control
It is important for a small business to stay in control of the internal working of their business. Don’t leave it to other people to monitor your accounts for you. Make sure to be the one that signs the checks, handle reimbursements, approve overtime pay, and other payroll functions. This way you know what your employees are receiving and you will never be caught off guard.
Scrutinize Business Bank Accounts
As online banking is a major option, it is very easy to review your business bank accounts and activities. Make it a weekly habit to review your accounts and its activities and make sure everything matches up. There may be small in-frequencies that can show early signs of theft. You may see one or two out of order checks being made that you have no knowledge of. Often theft is very small at first and can grow over time. Watch the accounts yourself at least weekly. This will help you detect fraud sooner.
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There are many more ways to help prevent financial fraud in your business. This is the first part and there is more to come in preventing fraud in your business. For quality bookkeeping and accounting services, contact Mark Dicus & Company today.