Small businesses do what they can to protect themselves from being robbed, but what about employee fraud? Fraud is occurring in companies of all sizes, and it is up to you to find ways to help prevent it from happening in your company.
While small business owners may not have the man power to employ a full-fledged fraud detection unit, there are procedures they can implement to curb employee fraud.
“Segregate accounting duties to the greatest extent possible,” recommended Ken Stalcup, certified fraud examiner and certified public accountant at Somerset CPAs. “No one person should be responsible for an entire accounting cycle, meaning no one person should be allowed to approve vendor invoices, prepare checks to go back to that same vendor, sign the checks, post the checks to the general ledger and reconcile the bank account.”
A system of checks and balances should also apply to inventory. “If you are a business that includes inventory, make sure your shipping and receiving departments are separate departments handled by separate employees,” advised Marc Bourne, vice president of Know It All Intelligence Group. He added that annual inventory counts should be done by a third-party vendor or an employee that is not responsible for the involved departments.
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