Owning your own business comes with a lot of financial rewards but along with those rewards also comes a lot of responsibility including various bookkeeping tasks essential to keeping your business operational. If you are taking your role as a business owner seriously, you probably already have various procedures in place to prevent bookkeeping fraud. Regardless of how careful you are, nearly 50% of all businesses will become the victim of employee fraud. According to research the average amount of fraud amounts to roughly $115,000 per business. The knowledgeable experts at Mecham Dicus & Company recommend watching for the following telltale signs that your business may be the victim of fraud. Giving a single employee too much access without any follow up.
Need for Employee Monitoring
You should never put your trust in one single employee by making them responsible for tracking expense sheets and authorizing payments. If you give too much financial control to one person you increase the chances of your company becoming a victim of fraud. Your employees may never steal from you but it is always prudent to audit their prior transactional input as well as implementing procedures to ensure that you have a second set of eyes on each and every transaction.
Bank Reconciliation Errors
Whether your funds are received electronically, you deposit your checks into a bank account, or if you use a point of sale system, you should reconcile your cash balances to make sure they match your sales and expense reports. Pay attention to balances that are too high as well as those that are too low. While consistently low balances are an immediate red flag keep in mind that your employees are not perfect and that mistakes like miscounting change and accounting errors can happen on occasion. On the other hand consistently high balances could indicate that your employee is feeling remorseful and paying back money they may have previously taken.
An employee who insists on doing everything and refuses to allow coworkers to help, or an employee who never takes time off may appear to be the perfect employee or they may be trying to cover up fraud. It is not uncommon for a business owner to discover theft when a substitute accountant or bookkeeper is unable to balance the accounts. If one of your employees is reluctant to accept help from a coworker be sure to take the time to investigate.
Employees with Personal Problems at Home
Many employers are under the assumption that personal gain is the most common motive behind employee fraud. While this is certainly true in some cases, a large percentage of fraud is committed to provide for a child or a sick spouse. Pay attention to what’s going on in the lives of your employees by inquiring about their family and providing emotional support when they need it. Listening to your employees makes it much harder for them to justify (in their own minds) stealing from you.
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If you suspect that one of your employees is stealing approach them calmly by asking questions that can help you understand the transactions that you have flagged. Even if you determine that no fraud has been committed, it is in your best interest to move to an accounting service that can independently review your records and prevent potential fraud in the future. To learn more about professional accounting, consulting and tax services, contact the knowledgeable experts at Mecham Dicus & Company today.