Preventing Embezzlement
TIPS FOR MAINTAINING CONTROLS
| Issue | Action |
|---|---|
| Audit | Periodically audit your check stock to ensure all unused checks are accounted for. |
| Bank accounts | For a better audit trail, consider separate accounts and separate employees for accounts payable and accounts receivable. |
| Bank statements | Examine statements immediately when they are received, to detect fraudulent account activity. |
| Segregation of duties | Have someone independent of check-writing responsibilities reconcile your bank accounts. Rotate personnel on a quarterly basis. Always provide dual approvals on wire and ACH transactions. This ensures more than one employee is reviewing them. |
| Check stock | Keep your check stock locked up at all times. When checks are printed, every check should be accounted for, including voided, jammed and cancelled checks. |
| Document management | Protect all documents by locking them up and always maintaining a "clean desk" policy. If documents need to be discarded, shred them. |
| Employees | Screen new employees with background checks before making a job offer, even part-time employees or contractors. |
| Paper vs. electronic | Electronic processing and operations reduce risk and increase controls by making it tougher to destroy and hide important documents. |
| The "trusted" employee | More times than not, the "trusted" employee is responsible for embezzling funds. They get forgotten about because they've been around a while and they know the system. |
| Protect all accounting documents | Secure check stock, signature equipment, invoices, statements and other critical information. |