-
Accept
the idea that fraud is commonplace and can happen at any business.
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Set
an appropriate ethical example for employees to follow, and treat them with
respect and fairness, including fair pay.
-
Ask
your employees to identify ways in which someone could commit fraud at your
company and the ways to avoid it.
-
Develop
a code of conduct that explicitly prohibits employees from committing fraud,
conflict of interest and other illegal acts. Ensure all employees,
vendors and customers get copies of it. Consider having key employees
provide annual confirmations of their compliance and have a clear company
policy on time and expense reporting.
-
Adopt
a "trust, but verify" code. If you need only one bookkeeper,
conduct a careful background check before hiring. Take note of employees who
appear to live substantially beyond their means.
-
Verify
the credentials of all new vendors before they are authorized to supply the
company. Periodically review vendors to identify possible improprieties.
-
Make
sure all disbursements are properly approved.
-
Protect
yourself against check alterations by adopting electronic transfers for
large payments, using direct deposit for payroll, placing a dollar limit on
checks and implementing up-to-date check security measures.
-
Review
original bank statements before your bookkeeper does. Keep an eye out for
unexpected overdrafts or declines in the cash balance.
-
Make
sure bank statements are reconciled each month and that an expert adviser,
such as a CPA, reviews the bookkeeper's work periodically.
-
If
something seems odd, whether it is a disbursement to an unfamiliar vendor or
unexpected costs, consider the possibility of fraud.
