Wesak International Film Festival

What Are the Best Ways to Prevent Bookkeeping Fraud?

As a business owner, you always want to bring out the best in your employees. Once employees work for you for a couple of years, then you might have established a certain bond with them and you know how to treat them in a way that will evoke the best of their capabilities.

Although this is encouraged for every business owner to do, there is a downside to this. Whenever you establish trust with your employees, there might be some that will take advantage of that and it could be a reason for company fraud.

This is especially true when we are talking about bookkeepers and accountants. That is why it is advisable to take accounting and bookkeeping services in Malaysia and outsource them whenever possible to ensure that this won’t happen.

But aside from that, what are the best ways to prevent bookkeeping fraud? Read on to find out.

Restrict Manual Payments

There are some instances that your bookkeepers will make cash payments on behalf of your company, but instead of taking out only the required amount of money, they take more and pocket the rest.

This is actually a common practice and it is a scheme that needs to be monitored so as to not get this out of hand.

There are also some cases where the bookkeeper would examine your handwriting and would make two checks. One would be used to pay the bills and one would be used for personal gain.

To help prevent this, most utility companies and major suppliers are now offering automatic clearing house or ACH payments. This pretty much makes it impossible to hack the ‘pay-to-account’ transaction on a bank statement.

Divide Job Responsibilities

Typically, companies would assign or designate a specific person that will handle the payment of bills, paycheck issuances, handling of bank deposits, and the creation of financial statements, among many others.

If this is the setup you’re using, then there is a major risk of you getting duped by these people. You see, the “money person” would do the aforementioned things for you, but because they are the only ones that will manage your company’s finances, then they can do the things necessary to help cover their tracks, especially if they are doing something dubious.

To avoid this from happening, there should always be at least two people that will handle all of your company’s financials.

One would be assigned to make and collect payments, while the other one will be tasked to record all of the transactions in the financial books and would make sure that everything is verified by looking at the transaction receipts.

Review Monthly Reports

Even if you assign two people to handle your company’s finances, you have to also task the CFO or a financial controller to see if the things that are recorded in your company’s books match with their accounts.

It is imperative that you do this on a frequent basis to ensure that everything checks out and so that bookkeeping fraud will not happen in your workplace.