Fraud can be a major blow to a business if you don’t have an adequate system of internal controls. Apart from fraud related to cheques, criminals also have other ways of defrauding you.
To prevent your business being laid open to fraud:
- Separate duties, for example, one person receives money from customers and another records the receipt
- Limit employees’ access to business records
- Conduct internal control reviews regularly
- Have at least two signatures on each cheque
- Carry out regular stocktakes to reveal missing items of stock
- Take action if you find a large number of discrepancies between amounts customers claim to have paid and actual amounts received
- Pre-number source documents, such as receipts, and account for all missing numbers.
You may not be aware that your business is constantly exposed to risks of fraud. For example, you should not place too much responsibility on one employee because you may not be aware of external pressures such as gambling losses.
Make sure all prospective employees, who are likely to handle money or the accounts, are adequately investigated. Before they start, check up on their past and their reasons for leaving their previous employers. Telephone previous employers and referees to confirm the information you have been given.
Make sure that different people handle cash and stock at all entry and exit points, and that only those people who need access can read sensitive records. As much as possible, two different people should be responsible for recording cash and assets.
Make each employee or small team responsible for a separate float.