12. Sign all the Checks Yourself
Don't be quick to turn over signature authority to others in the company. If you sign all of the checks you have much better handle on where the money is
going.
11. Avoid Signing Checks on an Ad-Hoc Basis
Sign all of your checks on a regular basis. For example, all trade invoices are paid on the 1st and 15th of the month. All consultants are paid on the 10th and 25th of the month. It is too confusing when the staff is constantly
interrupting you to sign checks - and easy to let something slip by. Sign
checks while you are all alone and have time to consider the validity of what
you are paying.
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If you didn't trust them then they wouldn't be in a position to steal from you, would they?
10. Accounting Employees Must Take Their Vacation
All accounting employees must take their vacation every year and in a minimum of full week increments. By forcing these employees to take their vacation it becomes much more likely that you will be able to uncover fraudulent activities. (They are not there to cover their tracks).
9. Always Question Something
When signing checks always question something. Pick up the check and invoice backup and walk across the office to the accounting department and ask a question. It sends a strong message that you are paying attention to what is being paid.
8. Separate the Check Issuing and Bank Reconciliation Functions
The person who writes the checks should not be the person reconciling the
account. By separating these duties, you increase the likelihood of preventing
and uncovering employee dishonesty. It is easier for a dishonest employee to
cover their tracks when they are handling both functions.
7. Never Sign a Check without an Original Invoice as for Backup
Impose the discipline of have an invoice to support every check. If there isn't an invoice why are we sending a check?
6. Have all Client Payments Sent to a Bank Lock Box
One trick that dishonest employees can use is to open up a bank account in the company name that only they know about. They then deposit checks to this
account and cover their tracks through clever manipulation of the deposit
records. Having the checks sent directly to the bank lock box reduces the
opportunity for his to happen.
5. Have the Bank Statement Sent to Your House
Open the bank statement yourself and review the canceled checks for
irregularities. When you get to the office ask, to see the backup for a few
checks that were issued. This will send a message to the accounting department
that you are on top of things.
4. Don't Issue Corporate Credit Cards Unless Absolutely Necessary
Corporate credit cards are another opportunity for employees to "sneak through" personal expenses at the expense of the company. If you do need to issue corporate credit cards, impose dollar limits on each card and force employees to turn in expense reports with original receipts as support for their expenses. Only then issue a check for payment.
3. Use Special Caution in Signing Checks to Credit Card Companies and Utilities
One of the more clever ways of cheating the company is to make a check out to say American Express and asking a partner to sign the check. The employee then makes out another check to American Express for the same invoice and asks a
different partner to sign the check. The employee then sends the 2nd check to
cover their own American Express bill. It is a good idea to trace through the
credit card and utility payments to make sure you havent been the victim of
this scam.
2. Don't Count on Your Accounting Firm to Uncover Employee Theft
A routine audit of your company's books will normally not uncover employee
dishonesty. Most accounting firms lack the experience required to uncover
employee fraud and it is not the focus of their audit.
1. Trust but Verify
Yes the employee has been with you since the beginning and has shown tremendous loyalty and you trust them immensely, but this is a poor excuse for not implementing internal controls that reduce the chance of employee embezzlement. If you didn't trust them they wouldn't be in a position to steal from you would they?