Preventing Fraud - What You Should Be Looking For

Tax Professionals' Resource
November 12, 2012 — 1,122 views  
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Preventing Fraud - What You Should Be Looking For

Companies and non-profit organizations suffer from threats of fraud every day. As an owner, you may be taken aback by the activities and not know what to do because of insufficient experience and knowledge. In small and big communities, thefts are frequently caused by employees, especially those assigned to handle accounting duties. Once the fraud is found, thousands or millions of dollars become lost. There are ways that you can spot the problems before they worsen.

It is important to look for cases of larceny, cash theft and tax evasion. Stealing from cash and investment pools are usually the most sensationalized. People steal money, typically a handful at once, before the details are recorded in the system. They may create their own money receipts and deposits. Larceny occurs when someone steals money and falsifies checks after records are made. Accountants and financial professionals are the ones who commit this fraud. The theft is easy to find if you find small pockets of missing funds.

Search for inconsistencies in financial accounts. Fraudsters create phony receipts and wrongfully request reimbursements one or more times more than needed. Workers steal money by using the company’s financial account or not repaying loans. Small inconsistencies seem unimportant, but they add up over time. To find problems, look for valid receipts and make purchase records.

Internal auditing is the way to detect written deception. Falsifying part of a financial record is fraudulent, even if nothing is stolen. The information is deceptive and changes the costs. Auditors should be employed to do internal and external audits.

Find fraudulent favors and payments by looking for unfamiliar business names and expensive purchases. People hired to make purchases may request kickbacks so that the company pays more than expected. These problems are found when the market value of the items is known and compared with the paid value. Also, some payments are made to non-existent individuals or companies. This theft is more difficult to find in large companies that have hundreds or thousands of contracts and workers.

A major disadvantage of accounting fraud is the loss of confidence among the company clients and investors. A large number of cases are not announced. Businesses do not want publicity that is linked to internal crime reports. Preventing the theft is the best solution. When you build experience and reputation as an accountant, clients are more likely to manage the hardest challenges of finances.

 

Tax Professionals' Resource