How to Prove an Employee Forged Checks
Fraud is a dangerous issue that can and does affect many businesses. While most companies have instituted internal controls or other procedures to prevent fraud, employees may still be able to manipulate the company's processes to their own advantage. Proving fraud can be a costly and time-consuming process. Business owners and managers may review the fraud process themselves or hire an auditor to complete this function. Using auditors can help provide more insight on finding fraud and help in correcting controls to prevent future issues.
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Instructions
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Look for checks consistently written to one vendor. Employees might set up a fake vendor and cut checks to this company. The employee may send the checks to a Post Office box she owns and cash them under her name.
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Review relationships between an employee and other employees or vendors. An accounting employee may cut checks to someone with whom he has a close relationship in the business. By continually funneling money to this individual, the accounting employee may receive a portion of the money.
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Check the signatures on checks to review them for accuracy. Smaller companies will often receive their business checks back with their monthly bank statements. Reviewing the signature on a sample of checks can determine if someone is forging the owner's signature on checks.
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Complete bank reconciliations in a timely manner. Bank reconciliations are a common way companies can review the number and dollar amount of checks clearing the bank. Several different outstanding checks in similar amounts or cut to a single vendor can signal fraud issues.
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Tips & Warnings
Periodic internal audits of a company's internal controls or segregation of duties can help companies assess their accounting process for potential fraud issues. Shifting employees to different responsibilities is another classic way companies can determine if fraud is going on in the business.
Failing to control fraud can create serious legal and financial situations for a company. Fraudulent checks may cause the company to be financially liable for damage done to other businesses. In addition, banks may be less willing to work with a company that has a history of serious fraud issues.
