Big company, small company, startup, family business — Fraud and theft is possible no matter how large or little your organization may be. Maybe you don’t think it will ever happen to you because you’ve never actually been a victim of it… But, have you ever thought to look for signs that something could be wrong?
The Numbers Don’t Lie
A study done back in 2014 by the Association of Certified Fraud Examiners revealed that it could take up to a year and a half for an average fraud scheme to be detected. Forensic accounting firm Kessler International Examiners reported that 13% of employees steal from their employer.
So, how do you protect yourself?
Identifying The Red Flags
Accounting departments are particularly at risk for fraud, which means Controllers, managers, and CFO’s need to know what to look for. Having anti-fraud controls in place as well as an early detection system for red flags can help you stop a scheme in its tracks. Or, better yet, prevent a scheme before it has a chance to launch.
Let’s have a look at some potential warning signs that fraud is present in your accounts payable department:
- A single person has control over all aspects of the accounting process with NO system in place for checks or balances.
- Cheque deposit slips are missing from the bank reconciliation statement.
- The same individual who signs purchase orders also signs the receiving report.
- Some vendors get paid on a preferential basis — Who authorized this process?
- The general ledger is often unbalanced and you frequently find alterations to payables in your ledger.
- Handwritten invoices get paid with no questions asked.
- Some invoices from the same vendor have inconsistent or improper letterhead — yet these invoices still get paid.
- There are excessive purchases of unneeded items.
Making Fraud Mitigation A Priority
If any of the above processes or scenarios applies to your organization, then perhaps it’s time to realistically assess the risk of fraud — and the possibility that fraud may currently exist — within your company. Designing controls to prevent, identify, and correct for fraud while also periodically reassessing these controls in light of changing staff and technology is crucial.
And, most importantly, consistently testing the controls you have in place and communicating to all your employees and contractors that fraud will not be tolerated is something that must come from the top of the organization. Being prepared, protecting your human and financial assets, and ensuring that all stakeholders understand your position around fraud are the marks of a forward-thinking, strategic organization. What are you doing to protect your organization from fraud?
Download our whitepaper:How to Guard Against Accounts Payable Risk
Straight To Your Inbox
Stay up-to-date on top accounting and finance trends
Sign up for our newsletter and receive our latest resources, news and insights.
Learn More About Beanworks
Discover how AP automation can free your accounting team from manual data entry, delays, and paper-based processes.