The addage “desperate times call for desperate measures” applies to many businesses, large and small, during these difficult economic times. These measures can be in the form of reduced hours, layoffs, and business closures. There is another aspect of ‘desperate measures’ that is worthy of discussion: fraud by trusted employees.
We would like to offer some simple, yet effective ways to establish some accounting or internal controls.
- Related duties should be assigned to different people.
This is often difficult in a one or two person office, but it is worth an owner’s time to review the assignment of procedures to your employees, e.g., who opens the mail, prepares the deposits, writes the checks, etc., to identify potential areas of vulnerability.
- Reconcile and scrutinize your bank statements every month.
The owner should review bank statement and reconciliations, examine checks for authorized signatures and endorsements, and ask questions.
- Always ask for proof before you sign a check or authorize a transaction.
Your employees become more accurate and communicate their needs more clearly when you review original documentation
- Lock and protect your valuables.
Keep blank checks and signature stamps secured, deposit cash and checks daily.
- Know your employees and examine behavior changes.
Verify employee references before hiring, and consider the need for credit information, motor vehicle report, and criminal searches.
- Be careful making online purchases.
Use the latest internet browser, look for digital certificates, never give out your passwords or save them in the browser, and reconcile all online purchases.
Our firm can help you develop and implement any of these important internal controls and we will be happy to assist you any way we can.