Fraud Prevention Checklist
Know the people who work for you. Understand their life circumstances and motivation. Develop a sense of trust.
- Check employee references and perform the necessary background checks prior to hiring.
- Consider bonding employees who deal with company cash resources.
- Be aware of close relationships in functions that could provide an opportunity for collusion. Be careful about hiring relatives of employees.
- Be aware of how you treat your employees. Don't give them motivation or opportunity to take your business assets.
- Keep checks locked in a secure location.
- Have one person write checks and balance the bank statement and another person sign checks.
- Have one person receive deposits and another make the deposits, separate from the invoicing cycle.
- Keep all voided checks - do not destroy. Mark out as "VOID" and tear off signature if the check was signed.
- Keep track of sequential checks, so as to account for each one's use.
- Use a sequentially numbered receipt book for cash transactions. Keep all copies of receipts, even voided ones. Balance to incoming cash.
- Balance deposits put into the bank with customer transactions on a regular basis - daily or weekly.
- Reconcile checking account within 10 days of receiving bank statement.
- Set a reasonable amount with the bank for double-signature requirement.
- Put restrictions in place for wire transfers or online transactions.
- Do not allow an employee to write a check to him/herself or a family member.
- Do not have any more cash accounts than necessary.
- Regularly reconcile accounts receivable to the sales journal and cash receipts to detect possible diversion of funds.
- Make sure there are well-documented expense reimbursement procedures and that they are closely followed.
- Make sure there are well-documented petty cash procedures and that they are closely followed.
- Limit users of company credit cards and check expenditures per the credit card statement against the source receipts on a monthly basis.
- Perform regular, periodic inventory counts. Compare to sales and purchasing records, selecting random items to check for accuracy.
- Rotate the performance of bank and accounting duties.
- Make sure all accounting personnel take their annual vacations, and someone else performs their duties in their absence.
- Have financial statements checked by an outside accountant on a regular basis.
- Password-protect your accounting records and monitor its use/activity.
- Check employee references and perform the necessary background checks prior to hiring.
- Consider bonding employees who deal with company cash resources.
- Be aware of close relationships in functions that could provide an opportunity for collusion. Be careful about hiring relatives of employees.
- Be aware of how you treat your employees. Don't give them motivation or opportunity to take your business assets.
- Keep checks locked in a secure location.
- Have one person write checks and balance the bank statement and another person sign checks.
- Have one person receive deposits and another make the deposits, separate from the invoicing cycle.
- Keep all voided checks - do not destroy. Mark out as "VOID" and tear off signature if the check was signed.
- Keep track of sequential checks, so as to account for each one's use.
- Use a sequentially numbered receipt book for cash transactions. Keep all copies of receipts, even voided ones. Balance to incoming cash.
- Balance deposits put into the bank with customer transactions on a regular basis - daily or weekly.
- Reconcile checking account within 10 days of receiving bank statement.
- Set a reasonable amount with the bank for double-signature requirement.
- Put restrictions in place for wire transfers or online transactions.
- Do not allow an employee to write a check to him/herself or a family member.
- Do not have any more cash accounts than necessary.
- Regularly reconcile accounts receivable to the sales journal and cash receipts to detect possible diversion of funds.
- Make sure there are well-documented expense reimbursement procedures and that they are closely followed.
- Make sure there are well-documented petty cash procedures and that they are closely followed.
- Limit users of company credit cards and check expenditures per the credit card statement against the source receipts on a monthly basis.
- Perform regular, periodic inventory counts. Compare to sales and purchasing records, selecting random items to check for accuracy.
- Rotate the performance of bank and accounting duties.
- Make sure all accounting personnel take their annual vacations, and someone else performs their duties in their absence.
- Have financial statements checked by an outside accountant on a regular basis.
- Password-protect your accounting records and monitor its use/activity.