You’ve likely heard about the big fraud cases, such as Enron, WorldCom and Bernie Madoff. But, did you hear about the bookkeeper who walked away with $200,000 or the office manager who charged $150,000 to the company credit card? Maybe you read about it in a newspaper, but probably not. Unfortunately, fraud happens. It does not discriminate based on industry, background, status or any other characteristic, so you need to be aware and protect yourself and your business.
As a business owner or manager, here are three things you can do to prevent and detect possible fraud:
1) Walk-through and review your key business processes. Think like a criminal as you review your processes. Identify weaknesses and think of ways to either eliminate the weakness or mitigate the risk.
2) Review things you normally would not. Often embezzlement and fraud schemes are committed by the most trusted employees. Consider reviewing a bank statement or a new vendor list on occasion. Do not be afraid to ask questions if something looks odd or you don’t recognize a name.
3) Review expense reports. Review the details and determine whether the transactions make sense and actually are for business purposes. Accumulate all expense reimbursement claims for each employee and compare them to one another. Is there one employee whose expenses exceed everyone else in a similar position?
These are just a few things you can do. There are numerous others.
Steve Geertz, CPA, CFE is a principal for BG & Company LLC, which specializes in fraud investigations and forensic accounting work. Contact Geertz at steve.geertz@bgco-llc.com or 425-891-8752. For more information about BG & Company LLC, visit www.bgco-llc.com
