CHECKLIST FOR PREVENTING EMBEZZLEMENT
OR THEFT IN YOUR BUSINESS - 2012
In times of economic hardship it is even more important to be vigilant with regard to your financial security procedures. We hope that you will find these recommendations helpful. We welcome any questions or comments that you may have.
Send bank and credit card statements straight to the top
The company's owner, manager or a nonprofit audit committee member should be the first to review all bank account charges and canceled checks. Someone without authority to issue checks should reconcile bank statements and review them for forged or altered checks. Before paying credit card bills, support each charge with an original receipt.
Review documentation for all check requests
Compare original vendor invoices, purchase orders and receiving reports for agreement on quantities, brands, product descriptions and services requested. All should be stamped "paid" and marked with the related check number.
Monitor cash receipts and deposits independently of employees recording them
Have someone not involved in making deposits or recording accounts receivable open the mail, count money received and report totals to the owner, manager or other official who compares the reported amount to the amount deposited.
Reconcile accounts receivable and accounts payable monthly
Have the owner, manager or nonprofit audit committee member review and clear all exceptions.
Check out first-time vendors
Someone independent of purchasing and payment processing should review all entries for new suppliers. That person should call to verify the supplier's name, address, and federal tax identification number.
Restrict authorization and access to finances
Ensure that only appropriate employees can make transactions or have access to assets, documents and records. Password-protect computer files and set dollar limits on check authorization. Other safeguards include separation of duties regarding cash receipts or cash on hand and ensuring cash and financial documents are secure.
Make employees take vacations
Require personnel in accounting, human resources and cash-handling functions to take one to two weeks vacation each year, preferably at the end of an accounting cycle. Cross-train employees so that someone else can do their job—and double-check their work—during the vacation.
Watch for red flags in employee behavior
They can include substance abuse, gambling, change in lifestyle, extramarital affairs, living beyond one's means, possessiveness of work, high personal debts, high medical bills, peer pressures or simply dissatisfaction with work.
Conduct background checks on prospective personnel
Check references and scrutinize all dates and time gaps in resumes. Have employees bonded if they have access to cash or work in financial functions.
Have your CPA review the work of your accounting staff
As your CPA firm, we are uniquely qualified to review your internal control procedures, to spot check the work of your accounting staff, and to provide you with a higher level of comfort that your business assets are protected.
