1. Be Aware
Besides keeping an eye on financial statements, are there other ways a business owner can sense theft/fraud in his/her business?
Business owners can cover their bases by requesting backup documents to accompany unsigned checks and unapproved expense reports. Further, they should keep in mind that the largest percentage of fraud is related to billing schemes where an employer “unknowingly issued a payment” by submitting invoices for fictitious goods or services, inflated invoices or invoices for personal purchases, misuse of the company credit card and check tampering.
In addition to requesting backup documents, outsourcing your bookkeeping duties is a safeguard to theft. Outside providers are usually credible and less likely to be dissatisfied with your business. In the case that something looks wrong, bookkeepers should alert their supervisor as soon as possible. If it is the supervisor they suspect is behaving dishonestly, they should alert another superior they feel they can trust.
2. Account for Every Dollar
With small business downsizing in full swing, what are some easy ways a business owner can account for money coming in and out of the company without having to spend too much time?
Business owners can take even further precautions and have their credit card and bank statements sent directly to their homes. They should initial all items so that the bookkeeper knows the owner has seen and approved them.
3. Who’s at Risk?
Are small businesses at greater risk of theft and fraud than businesses with over 100 employees?
According to a survey conducted in 2008 by the Association of Certified Fraud Examiners (ACFE), businesses with fewer than 100 employees are typically thought to have fewer or weaker controls in place than their larger counterparts, primarily due to lack of personnel or financial resources.
The study, which is based on data compiled from 959 cases of occupational fraud that were investigated between January 2006 and February 2008, also notes that 81 percent of occupational fraudsters are also generally first time offenders, a result that remained consistent from their 2004 and 2006 surveys as well.
4. Warning Signs
What are some warning signs that business owners should pay particular attention to if they suspect a bookkeeper is stealing from them?
In the case that inventory has increased or decreased yet sales have remained the same, it is likely that someone is being deceitful. Furthermore, a change in a standard operating procedure when it comes to bookkeeping reporting is always a cause for concern.
We always advise businesses to assign more than one person to keep track of bookkeeping. Theft is more likely if there is only one set of eyes on the books.