Embezzlers do much more to your business than slowly eat away your profits. They can destroy your company. The median loss to businesses with fewer than 100 employees is $190,000 per scheme, according to the Association of Certified Fraud Examiners.
“When your business relies on a single point of failure, a single bookkeeper, you open the door to a host of problems, from human error to human deceit,” says Stephen King, president of GrowthForce, a provider of outsourced bookkeeping and controller services.
Instituting disciplined bookkeeping procedures can greatly reduce your company’s risk for occupational fraud. Here are just some of the internal controls King recommends business owners adopt to protect against theft.
1. Open the bank statement yourself.
Review each check for authorized payee, signature and approved electronic payments before handing it over to the bookkeeper.
2. Don’t let your bookkeeper reconcile the bank account.
The person paying the bills should not reconcile the account – that’s how embezzlers cover their tracks.
3. Close the prior period.
Once you produce a financial statement, that period should be closed to reduce risk of hiding a fraudulent transaction in a prior year.
4. Attach scanned images to each transaction.
Most fraud occurs through check tampering, where the bookkeeper changes the payee to him or herself.
5. Restrict user access.
Create systematic separation of duties so that the roles of authorization, record keeping and custodial responsibilities for each transaction are not shared.
6. Outsource your bookkeeping.
Outsourced, virtual bookkeeping can be an ideal solution for growing businesses. With the right team, you can have access to leading bookkeeping professionals, state-of-the-art technology and tools and a much more effective security process for a reasonable price.
Thinking about outsourcing? It might be the best way to prevent fraud.
Separation of duties can be difficult for growing businesses, making it much easier for a thief to cover his or her tracks. Having an outsourced controller oversee your internal bookkeeper provides you an additional internal control to reduce your company’s risk for fraud. Your data will be reviewed by several sets of eyes instead of only one person handling your company’s financial information.
You’re also likely to be audited at some point, regardless of your industry. Typically, an outsourced bookkeeping service will have an audit-ready process in place, which can save you countless hours and protect your company against fines and other consequences of being unprepared.
“Business owners are interested in working on their business, not working in their books,” says King. “Outsourcing their bookkeeping gives them confidence in their numbers and peace of mind that someone is watching over their business, so they can focus on what they do best.”
Don’t let your financial information fall into the wrong hands. As an Insperity strategic alliance partner, GrowthForce provides outsourced bookkeeping and controller services that streamline your bookkeeping, while providing experienced oversight, helping to ensure accuracy, compliance and fraud protection.