As the owner, your business means everything to you. You have spent years, as well as significant resources to bring it up from the ground and all of it today represents your efforts. This is why it may be quite disconcerting for you to finally start recognizing the signs of fraud in your business.

The first step is realizing that frauds occur. It happens more often than you know. In fact, back in 2014, a typical organization was losing as much as 5% of its revenue to accounting fraud.

Fraud dramatically impacts your assets, resources and can also ruin your brand image. Stay ahead of every employee in your organization simply by watching out for these signs of accounting fraud:

Aggressive Provisions Taken

Accounting fraud accomplished to cover up present counterfeit activities may be identifiable by unusual provisions.

Remember that employees at typically all levels of the organization can commit fraud with accounts receivables. Even though the methodologies may differ, most of them include diverting money before payments are recorded. If you are looking for fraud with assets, look for aggressive write-offs with inventory.

Aggressive receivable write-offs should generally be considered a sign of fraud until proven otherwise. Make sure that you implement foolproof internal accounting control measures to point out these signs of fraud.

Baffling Variances

If an accountant is planning to deceive third party contacts, they may try to dissolve records within a general ledger account.

Regardless of special circumstances, all variances should be clearly explainable. When the accountant fails to have an explanation for the variances, this is a clear indicator of fraud. Variances should be consistent with interrelationships, trends and expectations. If this doesn’t happen, you have accounting in your company.

Errors In The Financial Statement

Financial statement errors are made to deliberately misstate, misrepresent, or omit information to intentionally mislead the reader and create a false image of company performance.

Many accountants may commit financial statement fraud in order to attract investors, or for personal gains. This type of fraud is often evident when a large transaction is conducted but isn’t recorded in the statement. This is also the most damaging kind of fraud, therefore keep a check on all your financial statements and maintain multiple record keepers to point out differences.

Accounting fraud can happen across all sorts of companies regardless of their size. One easy way to avoid becoming a victim is to sign up with a professional accounting solutions services provider. Get in touch with us to learn more about our small business accounting solutions and how we help you operate better.