How Coveted Financial Helps Clients Prevent Fraud

According to CNBC, internal fraud will cost US businesses $50 billion this year, with two-thirds of that burden falling on smaller companies. How can your company avoid becoming a victim of fraud?

With lean staffing and heavy workloads, controllers must wear many hats, switching between bookkeeping, operations, payroll and reporting. Tasks can become concentrated in too few hands, sometimes tempting a worker to steal. At Coveted Financial Services, we show our greater Chicago area clients how simple it can be to make procedures more secure, while allowing controllers to focus more high value time on growth and improvement.

Coveted works with each client to ensure that access to company funds is based on a solid system of validation checks, so that no single person can handle both a purchase and a payment, or handle receipts and record deposits. When staff is short-handed, managers can strengthen procedures, such as supervisors approving time sheets, or production managers signing off on purchases. When necessary, the owner or outside parties such as directors can provide oversight.

We show clients how to avoid conflict of interest, such as related-party transactions. This may range from eliminating the hiring of relatives to eliminating transactions with employees or their families. Another simple step is to require three competitive bids for all major purchases, with final vendor approval by the owner.

Strict rules must be applied to the checkbook. No signature until the check is filled out with all details. Above a certain limit, require two signers, or the owner’s signature. When checks are issued, flag the invoice as paid and note the check number. Make sure accounting software has audit trails turned on. Consider reconciling checks using outside vendors.

How securely does your staff handle sales receipts? Record and deposit checks promptly, and reconcile frequently. When expenses are reimbursed, use a signed receipt. Conduct random cash audits. To make theft harder to hide, consider rotating tasks and requiring all staff to use their vacation time.

Because we recognize that a company owner or CEO may be more focused on Sales or Engineering than accounting, Coveted Financial coaches each client to develop a right-sized fraud prevention system, including how to establish secure rules, how to verify and when to hire an auditor or other support.

Coveted can often identify where outside help is needed. If a particular company controller is better at operations and forecasting than reporting and analysis, Coveted Financial may recommend placing a temporary team member to improve work procedures in a specific area.

Do you know where your company is vulnerable to theft? Who has access to company credit cards? Are itemized receipts required? Are purchases verified? Are vehicle logs reviewed regularly? When was the last time all company tools and equipment were inventoried? Virtually any company can greatly strengthen fraud prevention by adopting best practices, training staff and monitoring compliance.

 To protect your Chicagoland business against internal fraud and theft, schedule a free consultation with us today!