7 Ways to Protect Yourself Against Bookkeeper Fraud
Sadly, bookkeeper fraud is all too frequent. Be smart and be
aware. With a little caution, you can dramatically reduce your
chances of being a victim. Here are seven tips that will help you.
- Never give your online banking information to anyone,
period. Password access to your account is just an engraved
invitation for someone to dip his hands into the cookie jar. By
the time you realize the money is gone, your bookkeeper could be
too.
- Never have blank signed cheques anywhere. This is a
common mistake; many business owners leave signed cheques with
their bookkeeper or staff for the sake of convenience. But it
means that cheques to unknown payees and in unknown amounts can
easily be made out – and the perpetrator doesn’t even
have to forge your signature!
- Never give signing authority on your bank accounts to a
bookkeeper. You open yourself to abuse if your bookkeeper has
legitimate power to write cheques without your knowledge.
- Personally check your bank statements each month.
Question any entry or cheque that you don’t recognize.
Bookkeepers often go years without being detected simply because
they are the only ones who actually watch what goes through the
bank accounts.
- Separate your bookkeeping and accounting roles. Two pairs
of eyes on your books can provide a critical set of checks and
balances. The accountant can review the bookkeeper’s records
and vice versa, ensuring each person is held accountable and
deception is more likely to be caught.
- Match up cheques to a supplier’s invoice. If
there’s no invoice, investigate. Where is this money really
going? Also keep an eye out for phony or inflated invoices. One
way to minimize the risk of a phony invoice is by having purchase
order numbers and matching those numbers to invoices.
- Keep an eye out for duplicate cheques. One bookkeeper had
a nice racket going with the two partners of a firm. Each partner
had full signing authority on the bank account. Every month, the
bookkeeper would present a cheque to the first partner for her
invoice. She would then present an identical cheque to the second
partner for the same invoice. Because neither partner checked the
bank statements, no one was the wiser.
These few small controls can make a
world of difference to the integrity of your business. Do you have
the proper fraud controls in place? If you’d like a more
detailed analysis of your business system, call us for a
consultation at (416) 861-8177.
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