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Fraud Tips

It's a fact! Most fraud schemes are uncovered by accident, and usually not during a regular audit. For that reason, it is important that certain aspects of good internal control be adopted wherever possible. For example, the ability to authorize the recording of changes to the value of assets in the financial records, and physical access to these same assets, should not be vested with the same individual.

Have someone in authority high up in the organization, preferably an owner in a small business, to receive directly the unopened bank statements. Inspect the payee names and endorsements. Look for multiple endorsements and unusual payees, particularly variations of legitimate vendor names. Have someone who is independent of the cash disbursement function, periodically trace all cancelled checks to the check register and vice versa. Follow up on all reconciling items on the bank reconciliation, however minor.

Discuss issues of internal control with your outside or internal auditors. You don't have a CPA? Consider getting one, even if you do not require an actual audit.

Suspect fraud, or at least, cannot account for poor cash flow performance? Then consider finding a Certified Fraud Examiner, or CFE or a Forensic CPA. They can help you assess your situation and recommend a course of action. Most will be glad to do so in a discrete manner.

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