According to the Association of Certified Fraud Examiners’ (ACFE) 2016 Global Fraud Study, organizations lose 5% of their revenue each year due to various occupational frauds.
Which type of occupational fraud is most common?
As per the findings of the study, the accounting department is where most of the occupational frauds originate from, causing a median loss of $197,000 – a figure, higher in comparison to all other typical fraud schemes.
It might be happening in your company
What are the warning signs of an in-house accounting fraud?
The whistleblower has few things to share with you.
Sign #1: Have You Entrusted the Check Signing Responsibility and the Bank Statement Reconciliation Activity to the Same Employee?
If yes, there is a chance that your business is being subjected to an accounting fraud. After all, the check signer can easily approve fraudulent transactions and you won’t even know about it. Because in this case, the check signer is also the one who is reconciling the bank statements. The activity would go unnoticed.
Sign #2: Financial Accounts that Do Not Appear Familiar to You
Review your cash flow statements. Is there any financial account that does not appear familiar to you?
Creating fraudulent transactions in the accounting system to balance the books, is quite a common practice. If you find any financial account that appears unaccounted, ask for clarification.
Sign #3: Are There any Financials That Haven’t Been Settled for a Long Time?
Unsettled accounts that continue to appear for extended periods provide the perfect opportunity to accommodate any fraudulent financial activity within. If there is an account that has not been settled, inquire its reason. Review all the past records to ensure that the presented financials depict an accurate representation of the amount owed.
Sign #4: The Overachieving Employee
They are the stars of your business. They do not take any vacations. They are always on time. They are always eager to volunteer for any activity. They are always ready to go that extra mile. These are your overachieving employees. But they could also be guilty of being involved in an accounting fraud. Especially, if they always want to do everything on their own and are not willful to release a part of their responsibilities to others.
Praise them and appreciate them. But, also keep a close eye on them.
Sign #5: A Financial Data Set that “Mistakenly” Got Deleted
So, would the employee say, following the tedious restructuring process or amidst a new business division launch. And, if so is the case, be all ears and eyes open. Mine into the details. Go overboard if you have to. A lost financial data set resonates highly with the chances that your business is being subjected to an in-house accounting fraud.
What You Can Do to Prevent Accounting Fraud from Happening in Your Company?
Structure a robust in-house audit policy. Make sure, you oversee the implementation of the policy yourself and monitor the system personally to identify any signs that may indicate a potential fraudulent activity.
Another step that you can take is outsource a part of your accounting operations to an accounting service provider or bookkeeping service. This will ensure that the essential accounting data is double checked.
Looking for Bookkeeping Service in Fort Lauderdale?
We are here to accommodate all your outsourcing accounting needs. From tax services and online payroll services to bookkeeping services and medical billing solutions – we cater to all types of accounting needs of small businesses. If you have a business in Palm Beach County or Broward County, feel free to contact us.