How to Detect Signs of Fraud Committed by a Bookkeeper

You may never consider that your company could have trouble with fraud committed by a bookkeeper, but did you know that small and mid-sized businesses can be more susceptible to fraud than larger companies? In a tight-knit environment, you can trust your employees to the extent that signs of fraud go unnoticed. Review the signs of fraud to protect yourself and your company's funds.

Instructions

Understand Fraud

1. Know that fraud can occur in several forms in the workplace. Bookkeepers, for example, may commit fraud by authorizing checks as "consultation" costs or authorizing personal expenses.

2. Remember that many types of fraud as classified as "occupational fraud." Occupational fraud is clandestine activity that is used for personal financial gain. Your company will lose revenues or assets as a result of occupational fraud.

3. Consider the facts. Small and mid-sized companies are especially vulnerable to fraud, because they usually don't segregate duties. One person may be in charge of accounting records and cash receipts, making it easier to conceal fraud.

Know the Signs of Bookkeeping Fraud

1. Get familiar with the most common types of bookkeeping fraud. You will be able to identify signs of fraud more easily.

2. Look for signs of forgery. Bookkeepers who commit fraud may forge authorization checks to release company funds.

3. Know that your bookkeeper can commit fraud by opening another company bank account without anyone's knowledge. They can then make deposits into that company account and access the money for personal use.

4. Watch out for "less cash" deposits. Bookkeepers can commit fraud by depositing checks into the company account and then deducting a "less cash" amount.

Investigate Fraud Committed by Your Bookkeeper

1. Call local law enforcement when fraud has been detected at your company.

2. Consider hiring a Certified Fraud Examiner or CFE. A CFE can review records to identify suspicious and fraudulent transactions, compile comprehensive fraud reports, and testify at trial for your company.

3. Look into preventative measures to protect your company funds from bookkeeping fraud.

Prevent Fraud

1. Foster an environment of honesty and ethics amongst your employees.

2. Identify and maintain a "zero tolerance" policy for those caught committing fraud.

3. Hold training sessions to keep employees acquainted with your company's regulations and rules of conduct.

4. Consider increasing your security systems to prevent fraud. You can combat fraud on several levels, including computer systems, payment systems and record keeping.

5. Review your books regularly. Stay on top of your company's finances to identify potential transgressions as they arise.

6. Develop a fraud reporting system. Create a way in which your employees can report suspected bookkeeping fraud anonymously.

7. Consider contacting a Certified Public Accounting firm to conduct a fraud and systems audit.

Resources

• Review fraud protection basics at Abcsmallbiz.com
• Use the Business Resource Service to find out more about fraud
• Get a primer on Bookkeeper Bank Fraud at Tabexperts.com