I hate to read articles like Businesses are Prey to Embezzlement from the Atlanta Journal Constitution. I hate it because the events that unfold in this article lead to a result that is unnecessary and make me sound like a broken record. I understand that business owners are reluctant to spend a few thousand dollars up front to beef up their internal controls. But it sure does seem silly to allow a business and lives to be ruined as a result of a fraud that could have easily been prevented.
In the case of this article, the words “beef up” aren’t even right. The company in the article had 28 employees. 28! Not everyone has to have an accounting degree. Somewhere in those 28 were people who could have:
• Opened the mail to look for late notices from vendors
• List the incoming checks
• Verified checks received to daily deposits
• Reconciled the checking account
I know I sound like a broken record folks, but a lot of these scams can be prevented or caught at an earlier stage. If the above steps were segregated, that would have immediately limited the opportunity of the bookkeeper to perform certain types of fraud without detection.
In addition, if the bookkeeper knew that a Certified Fraud Examiner regularly reviewed random accounts and transactions, they might just decide to either stay honest or move to an easier target. I am delighted to help businesses after a theft occurs but I much prefer to help businesses take steps to minimize the chance of fraud occurring in the first place.
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