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Manage Your Fraud: A Checklist

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No checklist can protect an organization from the possibility of fraud, but there are many preventive actions that can reduce a potential fraudster’s opportunities to do harm. The more of these preventive steps an organization puts into place, the more difficult it can be for someone to get away with committing fraud.

No matter what safeguards may be in place, though, there’s no substitute for paying attention, being an involved owner/executive, and setting an ethical tone within the organization.

Here are some steps or activities to make sure you have in place at your organization.

Segregation of duties for handling assets going in or out

  • Receipt of payments: A separate person performs each of these duties: opening mail, recording payments received, making the bank deposit.
  • Making payments: A separate person performs each of these duties: receiving invoices or payment requests, recording payments in the checkbook or ledger, creating/signing the check.

Monitoring cash flow and financial status

  • Reconcile bank statements every month.
  • Provide month-end financials promptly after closing every month, and financial statements soon after fiscal year end.
  • Conduct internal and external audits regularly.

Employee matters

  • Require all employees to take a minimum period of time off while someone else covers their position. If possible, implement job rotation as an additional safeguard.
  • Conduct background checks and credit reports on all employees, or at a minimum, all employees exposed to company assets.

Setting the tone for ethical behavior

  • Require fraud prevention awareness training.
  • Implement an employee hotline so that employees have a way to report suspected fraud. This is the #1 way workplace fraud is detected.
  • Implement and emphasize a code of conduct.

Watching for fraud red flags

  • Are you aware of employees who:
    • Display financial issues, such as wage garnishments?
    • Appear to live beyond their obvious means?
    • Seem particularly disgruntled and may have a motive for fraud?
  • Are there unexplained changes or adjustments in your financials or monthly reports?

In summary

No organization leader wants to believe that an employee could steal, but organizations lose 5% of their annual gross revenues to internal fraud. To learn more about how to protect yourself, contact Cindy McSwain using the information below.

Cindy McSwain

Senior Vice President,
Outsourcing Services
Cindy McSwain leads AGH’s outsourcing services group. Her team provides payroll, accounting, funds disbursement, controller, and other financial outsourcing services to numerous clients throughout the U.S. Prior to directing the outsourcing group, Cindy served AGH’s audit clients for 10 years, working with a wide range of middle-market, closely held and family-owned clients.

Her current clients cross many industry sectors, including manufacturing, distribution, restaurants, retailers, medical, and not-for-profit. She has participated in numerous SEC filings and public registrations and has experience in mergers and acquisitions. Cindy is a certified public accountant and a member of both the American Institute of Certified Public Accountants and the Kansas Society of Certified Public Accountants.
Cindy McSwain
Cindy McSwain
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