How to Avoid Fraud
By altering company deposit slips, an employee was able to embezzle $244,000. She prepared two deposit slips: one put funds into the company’s account and the other put funds into her own bank account. This went on for over three years without detection because the employee handled both bookkeeping and deposit activities for the company.
Employee Dishonesty Is Costly and Common
Stories like this are more common than most business owners want to believe. According to the Association of Certified Fraud Examiners, an estimated 6% of business revenues are lost as a result of occupational fraud and abuse. This translates to losses of approximately $4,500 per employee!
Yes, Small Businesses Are Vulnerable
You might think that large companies are more susceptible to employee dishonesty; but it’s actually small businesses that are the most vulnerable. The average fraud costs small businesses (100 employees or less) a whopping $127,500 per occurrence compared to only $97,000 for the largest corporations.
Small businesses are more likely to become the victims of fraud than larger businesses because they don’t have the controls in place to prevent it. As in the example above, many small businesses rely on one person to complete all their accounting transactions from beginning to end. This person opens mail, processes accounts, makes deposits, and handles invoices. While most employees will handle this work honestly, that kind of unrestricted access may prove to be too much temptation for some.
An Ounce of Prevention
“Most successful embezzlement schemes would have failed if inventory and accounting records were organized and up to date.”
Safeguarding your business may be easier than you think. Some simple and inexpensive measures include keeping your company’s checks locked up, stamping incoming checks “for deposit only,” and insisting that all employees take allotted vacation time. Employees may avoid being away from work to prevent discovery of their crimes.
Other solutions may require more effort — maybe even some outside help. According to the Small Business Administration (SBA), “Most successful embezzlement schemes would have failed if inventory and accounting records were organized and up to date. If records are always behind and the work is sloppy, theft will be much harder to detect.” The SBA also recommends that you bring in an outside party at least once a year to conduct an unscheduled audit of your books.
One of the best ways to gain a macro view of your business is through SG&A Reporting.
If you’re looking for a trustworthy bookkeeper or accountant, contact us today to learn how OWL can help you.
Learn More About How OWL Can Help You
Bookkeeping
Whether you need help with accounts payable, payroll or your monthly close, our accountants ensure these critical tasks are completed accurately and on time.
Accounting
When your books are up to date, you can respond to opportunities and challenges quickly. Accurate, bank-ready financials allow you to make better decisions for your company.
Financial Planning
Gain access to powerful insight typically only available to companies that employ a full-time controller or CFO. Leverage their expertise when you need it, without adding to your payroll.
Freedom to Focus on Your Business
Our Partner Organizations →
Get the Full View of Your Business Financials
Just like an owl can turn their head 270 degrees to see the whole landscape, Owl Bookkeeping and CFO Services can help you see your full financial picture.
Call us today: (612) 816-6007
