A friend of mine works for a small business which contracted with another small company to handle the bookkeeping. The bookkeeping service embezzled money and fled, leaving my friend to pick up the pieces for her employer. A painful experience for both her and her employer.
A 2016 insurance survey indicated 80% of embezzlement cases occur at small companies. This is most often due to a lack of regulations in and between departments. How can you prevent this type of crime and damage to your company?
Financial and accounting departments are a hotbed for fraud accounting for as much as 40%. If you outsource finance and accounting, the outsourcing firm requires particular scrutiny. Check the firm out with BBB and online search, get three references and speak to them.
As far as employee fraud goes, separation of duties adds oodles of protection. The employee issuing checks can’t sign them, and the employee setting up system users can’t access payroll. Technology lends a helping hand, too.
Your bank should offer automated fraud detection tools which require an Internet connection, a secure network, and simple setup on your end. This tool controls check fraud.
Designate someone to check your system user list regularly for fakes, both users, and vendors. The person writing checks should not be the one reviewing this list, nor should they be able to enter vendors in your system. It’s crucial to restrict system access by user group based on their role.
Limit data exporting from your CRM or ERP system. Review employee internet usage. Movement of large files to cloud-based storage services on a regular basis is a red flag.
And don’t hire that bookkeeping company recommended by Aunt Edna because she knows the owner.
Author: Kris Keppeler, writer for Crossing Genres on Medium.com, and Does This Happen to You? on Channillo. Award winning podcast producer. Follow her @KrisKKAria on Twitter or on LinkedIn.