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Atricle Dump - Common Small Business Frauds & Suggested Controls
People make their first impressions of both you and your business within the first few minutes of stepping into your office. It is crucial to make a good impression from the minute your guests step through the door until the moment they leave. It is important to maintain a level of professionalism while at the same time making anyone who comes to your office for a meeting comfortable.The reception area of your office should be setup with a receptionist's desk facing the main entry to your office with the receptionist facing people as they come through the doors. She should be able to great your guests immediately and lead them to a seating area where they can wait while the receptionist calls you out for your meeting. Simple comfortable furniture is a great idea for this seating area, specifically a couch and two chairs. You should have a coffee table in this area as man
* Setting appropriate limits on the dollar value of transactions.
* Confirming security arrangements with the bank on a regular basis.
* Ensuring that bank authorities of terminated employees are removed immediately.
* Installing virus and firewall protection to reduce the risk of access by third parties.
* Ensuring that staff immediately delete any unsolicited or spam emails that request the banking details of the business.
PAYROLL FRAUD
This is common where employees
It's a given, isn’t it? If you're in business, your number one job is to market. If you keep your business a secret - don't let people know how you can help make their lives better and what you do, you won't be successful - because no one will know that you're in business. How well you network, which is the "letting people know how you can help them" part, may well determine whether you succeed – or fail.There are four main types of organizations where networking opportunities for business owners exist. There are 1) business networking groups, 2) service-oriented groups (Rotary, Elks, Soroptimist, for example), 3) our local Chambers of Commerce, and 4) business-specific groups (realtors-only, coaches-only, etc.)Which one is best for you? Well, in all of the groups, you are connecting with other business owners, getting to know them personally and professionally, b
The festive and holiday period is typically the time of year when many frauds occur as business owners often hand over control of various tasks to more junior or temporary staff and they become less careful about monitoring procedures.
Statistically the most likely person to commit a fraud such as embezzling money is a long standing and trusted employee.
Business owners can protect themselves by developing reliable accounting and other internal controls and constantly monitoring the effectiveness of these controls.
The most common frauds that are committed by employees including some appropriate controls that should be put in place include:
THEFT OF MONEY
Frauds that involve money can be very costly for small businesses and in some cases can lead to the closure of the business. Examples include stealing cheques sent by debtors directly from the mail, forging an endorsement on a cheque, stealing cash from the till, and falsifying signatories and amounts on cheques issued by the business.
Suggested Controls
* Separation and rotation of duties between cash/cheque handling, preparing the banking records and recording in the general ledger.
* Having at least two persons sign all cheques.
* Performing regular bank reconciliations.
* Regular observation of employees handling cash or receipting debtors.
* Issuing pre-numbered receipts for all monies collected and recorded in the debtors ledger. This notifies the customer that their money has been received and recorded.
* Daily banking of cash and cheques and prompt recording of transactions in the accounting records.
ELECTRONIC BANKING FRAUD
Electronic banking is used increasingly by businesses for payroll, supplier payments and transfers of funds between bank accounts. Whilst this is a more efficient way of dealing with these types of banking transactions business owners often fail to implement appropriate safeguards.
Banks will not reimburse businesses from losses arising out of electronic banking fraud where the business has contravened certain conditions (e.g. not keeping the password in a safe location).
Suggested Controls
* Having at least two persons approve all payments and transfers.
* Maintaining security over passwords (i.e. ensuring that they are input without others observing, are not written down and are changed regularly).
* Setting appropriate limits on the dollar value of transactions.
* Confirming security arrangements with the bank on a regular basis.
* Ensuring that bank authorities of terminated employees are removed immediately.
* Installing virus and firewall protection to reduce the risk of access by third parties.
* Ensuring that staff immediately delete any unsolicited or spam emails that request the banking details of the business.
PAYROLL FRAUD
This is common where employees a
Why develop a marketing campaign just for the Thanksgiving to New Year period? It’s simple.From now until January 1, the “buyer mentality” prevails. Buyers are ready to make purchases at any time, not just while shopping. Many businesses make as much as 50% of their revenues during this period . Study these marketing strategies and adapt them to your business. Below are my top 5 strategies.1. PRODUCTS AND SERVICES FOR EVERY BUDGETTo maximize revenues, smart retailers develop gift ideas to fit every budget -- for example, Gifts Under $10, Under $50, Over $200, etc. How can you develop products or services to fit every budget in your business?2. HOLIDAY PACKAGESHoliday packages are the HOT sellers right now! Why? Because they take the “thinking” out of buying. For example, pre-package gifts of soaps, body lotion and bath salts. How
The most common frauds that are committed by employees including some appropriate controls that should be put in place include:
THEFT OF MONEY
Frauds that involve money can be very costly for small businesses and in some cases can lead to the closure of the business. Examples include stealing cheques sent by debtors directly from the mail, forging an endorsement on a cheque, stealing cash from the till, and falsifying signatories and amounts on cheques issued by the business.
Suggested Controls
* Separation and rotation of duties between cash/cheque handling, preparing the banking records and recording in the general ledger.
* Having at least two persons sign all cheques.
* Performing regular bank reconciliations.
* Regular observation of employees handling cash or receipting debtors.
* Issuing pre-numbered receipts for all monies collected and recorded in the debtors ledger. This notifies the customer that their money has been received and recorded.
* Daily banking of cash and cheques and prompt recording of transactions in the accounting records.
ELECTRONIC BANKING FRAUD
Electronic banking is used increasingly by businesses for payroll, supplier payments and transfers of funds between bank accounts. Whilst this is a more efficient way of dealing with these types of banking transactions business owners often fail to implement appropriate safeguards.
Banks will not reimburse businesses from losses arising out of electronic banking fraud where the business has contravened certain conditions (e.g. not keeping the password in a safe location).
Suggested Controls
* Having at least two persons approve all payments and transfers.
* Maintaining security over passwords (i.e. ensuring that they are input without others observing, are not written down and are changed regularly).
* Setting appropriate limits on the dollar value of transactions.
* Confirming security arrangements with the bank on a regular basis.
* Ensuring that bank authorities of terminated employees are removed immediately.
* Installing virus and firewall protection to reduce the risk of access by third parties.
* Ensuring that staff immediately delete any unsolicited or spam emails that request the banking details of the business.
PAYROLL FRAUD
This is common where employees
One of my favorite moments on any project is the moment when, after spending hours investigating a process, an exhausted interviewee gives an exasperated gasp and says “Well, that’s the way we’ve always done it!”Most companies with a long and storied corporate history have a similarly colorful story behind their internal processes. System limitations, management fads and product introductions have shaped everything from invoice generation to marketing campaign design. In many instances, over a matter of time these processes become a source of pride, and are even seen by some as a source of competitive advantage. People in the company that know the nuances of these processes, and are able to “finesse” a new product or management dictum into the confines of the current practice are highly regarded, and many an intelligent person is relegated to hammering square pegs int
* Having at least two persons sign all cheques.
* Performing regular bank reconciliations.
* Regular observation of employees handling cash or receipting debtors.
* Issuing pre-numbered receipts for all monies collected and recorded in the debtors ledger. This notifies the customer that their money has been received and recorded.
* Daily banking of cash and cheques and prompt recording of transactions in the accounting records.
ELECTRONIC BANKING FRAUD
Electronic banking is used increasingly by businesses for payroll, supplier payments and transfers of funds between bank accounts. Whilst this is a more efficient way of dealing with these types of banking transactions business owners often fail to implement appropriate safeguards.
Banks will not reimburse businesses from losses arising out of electronic banking fraud where the business has contravened certain conditions (e.g. not keeping the password in a safe location).
Suggested Controls
* Having at least two persons approve all payments and transfers.
* Maintaining security over passwords (i.e. ensuring that they are input without others observing, are not written down and are changed regularly).
* Setting appropriate limits on the dollar value of transactions.
* Confirming security arrangements with the bank on a regular basis.
* Ensuring that bank authorities of terminated employees are removed immediately.
* Installing virus and firewall protection to reduce the risk of access by third parties.
* Ensuring that staff immediately delete any unsolicited or spam emails that request the banking details of the business.
PAYROLL FRAUD
This is common where employees
One of the great myths associated with the “American Dream” is that you need to have a four-year college degree to be successful. As the economy has shifted to the information age, with a greater reliance on technology and services, this belief applies less and less.The new economy relies on technology more than any time in the past. In fact 70% of existing jobs require specific technical knowledge and this technology is being applied in newly created industries like biometrics, homeland security, nanotechnology and reusable energy.Eighty percent of existing jobs don’t require a four-year degree, while only 25% of students who begin college actually graduate. Of those who do graduate, 30% don’t get a job that actually requires a degree!The solution to these issues for many graduating high school seniors and workers unsatisfied with their current careers res
Banks will not reimburse businesses from losses arising out of electronic banking fraud where the business has contravened certain conditions (e.g. not keeping the password in a safe location).
Suggested Controls
* Having at least two persons approve all payments and transfers.
* Maintaining security over passwords (i.e. ensuring that they are input without others observing, are not written down and are changed regularly).
* Setting appropriate limits on the dollar value of transactions.
* Confirming security arrangements with the bank on a regular basis.
* Ensuring that bank authorities of terminated employees are removed immediately.
* Installing virus and firewall protection to reduce the risk of access by third parties.
* Ensuring that staff immediately delete any unsolicited or spam emails that request the banking details of the business.
PAYROLL FRAUD
This is common where employees
Exhibitions and Trade shows are the best place to promote your company or products. But proper promotion requires effective promotional materials such as Banner stands, brochures, other promotional literatures and a stylish trade show booth. All these promotional accessories compliment each other and are an integral part of a comprehensive promotional strategy. Banner Stands for Trade Show play their part in creating awareness and directing the target audience towards the exhibitor’s trade show booth.Banner Stands for Trade Show is a cost effective medium to communicate your promotional message. Due to their portable nature, they are widely used in trade shows, exhibition, and point of purchase displays or corporate events. First Trade Show offers many different types of trade show displays, units and trade show accessories.You can find a variety of banner stands
* Setting appropriate limits on the dollar value of transactions.
* Confirming security arrangements with the bank on a regular basis.
* Ensuring that bank authorities of terminated employees are removed immediately.
* Installing virus and firewall protection to reduce the risk of access by third parties.
* Ensuring that staff immediately delete any unsolicited or spam emails that request the banking details of the business.
PAYROLL FRAUD
This is common where employees are not paid the same amount each week (e.g. shift workers and temporary staff) and the amount paid is calculated on some factor such as the number of hours work units produced, or the volume of sales.
Common techniques include extending the number of hours worked and type of work done on time sheets, manipulating the clocking on and off times where a time clock is used and artificially increasing sales on which commissions are paid.
Other common payroll frauds include inserting ghost employees on the payroll and where employees lie about their experience and qualifications
Suggested Controls
* Review and authorisation of time sheets and clock on and off times by a supervisor and/or manager.
* Requiring all overtime to be authorised in writing beforehand.
* Separation and rotation of duties between employees paying wages and recording in the payroll ledger.
* Paying employees by cheque or direct deposit into specific accounts as this can be easily traced in the event that a fraud is uncovered.
* Obtain independent verification of the qualifications of employees, check their references and confirm their experience from previous employers.
* Conduct regular performance reviews personally on all employees that are listed on the payroll register.
THEFT OF STOCK
This fraud involves the theft of physical assets (e.g. stock and plant & equipment) from the business and usually occurs where there are large numbers of small inventory items. Examples include false write-off of stock in the accounting records, altering the stock-take records, and falsifying purchase orders or invoices to reflect the stock stolen.
Suggested Controls
* Limit access to stock and items of plant by physical security particularly after hours.
* Independent authorisation of stock write-offs or scrapping of inventory items.
* Purchase orders crosschecked to the invoice and appropriately authorised.
* Separation and rotation of duties in the ordering, receiving and recording areas.
* Conducting proper and regular stock takes using pre-numbered stock sheets.
BILLING SCHEMES
These schemes attack the payments system of the business and occur as most payments are made by cheque so there is limited scope to steal cash.
A typical billing scheme involves the person creating a false purchase invoice from a fictitious business, or an accomplice business and then having this false invoice approv
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