Preventing Fraud-- Fake Checks

How can I keep employees from writing fake checks?

Goldenseal accounting software gives you very good job costing and accounting data, which helps you to run your business more effectively. However, if you have dishonest employees who are responsible for entering your accounting data, there is still some chance they'll take advantage of lapses in your management, and steal from you.

This section covers ways to prevent fraud by employees.

One common method used by dishonest employees to use to "cover" embezzlement, is to create fake vendor accounts, enter fake invoices, and then pay the money to their own business or a confederate. All accounting transactions will look legitimate, and with a bit of desktop publishing, the employee can even create a decent paper trail that will justify the fake expenses.

Employees may also enter extra invoices from a legitimate vendor, and simply write the check to their own name, to their own business, or to a confederate.

You can prevent that kind of fraud in three ways:

Reconciling

The owner or a different trusted employee should always be the one to reconcile Goldenseal against the bank statement. You should never allow the same person to both write checks and reconcile.

A few times a year, check the payee names on each statement check, and make sure it matches the payee name in Goldenseal. That way you can catch checks that were written to a different party that what the books say.

Know Your Vendors

Check your accounts a few times a year, and investigate any accounts that you don't recognize.

You can also make it harder to create fake accounts by setting the password access so the employee who writes checks won't be able to create new accounts.

Check Job Costs

Goldenseal tracks all expenses, so an embezzler will need to inflate expenses somewhere to cover the money they steal.

If your project or overhead costs seem too high, investigate the expenses and double-check anything that seems suspicious. It will give you a better handle on your expenses and profitability, even if it doesn't catch anything illegal.

Click here for info about fraud by false check amounts.

Click here to return to business file topics.

Topics | Previous | Next | Getting Started Manual | Reference Manual | Site Map | Website