Tags |
|
|
Links |
|
|
Answer Upon - Common Small Business Frauds & Suggested Controls
You are ready to open your business so how do you make sure that it is successful? There are a few things that you need to make sure you do – here they are.* Choose a business that you are not only interested in but also reflects your strengths and interests. You want to have fun with your work obviously. If you look forward to starting work each day it reflects in your dealing with customers and staff.* Research your market and make sure that there really is a need for the product you want to sell.* Have a rock solid business plan that you refer to and continually update. Business plans are for every business – not just if you want a loan. They are the foundation of your business.* Have realistic and detailed plans for your first year of business and good plans for the next two years.* Ensure that you have a good financial safety net for
* Separation and rotation of duties between the person making the purchase orders and submitting the orders for payment, the person preparing the cheques and banking journals and the person recording the transactions in the accounting records.
* Invoices approved by one person and that person should not draw the cheques or have the authority to order goods or services.
* Using pre-approved suppliers limits the opportunity of using a fictitious business to conduct the fraud. Any invoice from a supplier that is not pre-approved should be verified before payment is made.
FALSE EXPENSE CLAIMS
These frauds involve the person inflating expense claims, making false or multiple claims for the one expense, or claiming a personal expense as a business expense. Whilst the amounts are usually so small to be noticed individually they should not be regarded as insignificant as they can have a large cumulative effect on the business.
Suggested Controls
* Require employees to submit detailed expense reimbursement requests including original receipts and supporting documentation and provide proof that the claim is for business purposes.
* Authorisation of expenditure reimbursements claims by the employee's supervisor or manager before it is submitted for reimbursement.
* Randomly checking expenditure directly with the supplier and verifying the invoice and payment
There is an old saying: “The first thing to do when the audience goes to sleep is to prod the speaker.” Most presentations are not intense enough. The average audience is lulled to sleep by droning monotony. A really energetic presenter can lose a pound or more in the course of an hour-long presentation, which gives some idea of the vigor which can and should go into it. If you are alive, alert, intense, enthusiastic, the audience cannot put their attention elsewhere.Direct participation by audience members is one of the best ways to keep their attention. When appropriately used, audience participation usually will focus the eyes and ears of almost every audience member on what’s happening. You should always be alert to possibilities for letting people in your audiences do and say. You may simply ask questions. You may ask for volunteers to demonstrate, or use a visiting
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 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 approved and paid.
Suggested Controls
* Separation and rotation of duties between the person making the purchase orders and submitting the orders for payment, the person preparing the cheques and banking journals and the person recording the transactions in the accounting records.
* Invoices approved by one person and that person should not draw the cheques or have the authority to order goods or services.
* Using pre-approved suppliers limits the opportunity of using a fictitious business to conduct the fraud. Any invoice from a supplier that is not pre-approved should be verified before payment is made.
FALSE EXPENSE CLAIMS
These frauds involve the person inflating expense claims, making false or multiple claims for the one expense, or claiming a personal expense as a business expense. Whilst the amounts are usually so small to be noticed individually they should not be regarded as insignificant as they can have a large cumulative effect on the business.
Suggested Controls
* Require employees to submit detailed expense reimbursement requests including original receipts and supporting documentation and provide proof that the claim is for business purposes.
* Authorisation of expenditure reimbursements claims by the employee's supervisor or manager before it is submitted for reimbursement.
* Randomly checking expenditure directly with the supplier and verifying the invoice and payment.
'Getting in front of the decision maker' seems to be the holy grail of the sales world. Most people think that the only way to secure meetings is through luck or cold calling. Yet there is an easier way.The following steps are identical to the steps I followed on my journey to becoming a 'Client Magnet'. Eventually, I didn't have to make any cold calls, because all of my meetings were taking place at the request of qualified, ready to buy decision makers who had already decided that they wanted to work with me.How to Get in Front of Decision Makers - the easy way1. Focus on a specific niche because that automatically makes you a specialist and a certain authority.2. Get known as an expert in your field by speaking at events and conferences populated by your target audience, write articles and get them published in trade publications read by your targ
* 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 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 approved and paid.
Suggested Controls
* Separation and rotation of duties between the person making the purchase orders and submitting the orders for payment, the person preparing the cheques and banking journals and the person recording the transactions in the accounting records.
* Invoices approved by one person and that person should not draw the cheques or have the authority to order goods or services.
* Using pre-approved suppliers limits the opportunity of using a fictitious business to conduct the fraud. Any invoice from a supplier that is not pre-approved should be verified before payment is made.
FALSE EXPENSE CLAIMS
These frauds involve the person inflating expense claims, making false or multiple claims for the one expense, or claiming a personal expense as a business expense. Whilst the amounts are usually so small to be noticed individually they should not be regarded as insignificant as they can have a large cumulative effect on the business.
Suggested Controls
* Require employees to submit detailed expense reimbursement requests including original receipts and supporting documentation and provide proof that the claim is for business purposes.
* Authorisation of expenditure reimbursements claims by the employee's supervisor or manager before it is submitted for reimbursement.
* Randomly checking expenditure directly with the supplier and verifying the invoice and payment
Firstly the packaging. Without doubt it is recognizable in most places in the world. The shape never really changes. The colour can immediately provide an indication of ripeness and for ll of you kinesthetics you may want to press it just to see how ripe it really is. Lets consider shape – again some would say it should be up for design award as example of nature's packaging. As consumers it’s an easy fruit to open, no knives or anything else required. Once open the aroma is obvious as after all it is a banana. You may consider that because of it’s in built expiry indictor one glance and you know whether it is consumable or not suitable for purchase. Like other fruits it is biodegradable which for some is a further cachet. But wait lets think about the humble banana or indeed any other product no matter how enticing or interesting the packaging of the product, banana or othe
* 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 approved and paid.
Suggested Controls
* Separation and rotation of duties between the person making the purchase orders and submitting the orders for payment, the person preparing the cheques and banking journals and the person recording the transactions in the accounting records.
* Invoices approved by one person and that person should not draw the cheques or have the authority to order goods or services.
* Using pre-approved suppliers limits the opportunity of using a fictitious business to conduct the fraud. Any invoice from a supplier that is not pre-approved should be verified before payment is made.
FALSE EXPENSE CLAIMS
These frauds involve the person inflating expense claims, making false or multiple claims for the one expense, or claiming a personal expense as a business expense. Whilst the amounts are usually so small to be noticed individually they should not be regarded as insignificant as they can have a large cumulative effect on the business.
Suggested Controls
* Require employees to submit detailed expense reimbursement requests including original receipts and supporting documentation and provide proof that the claim is for business purposes.
* Authorisation of expenditure reimbursements claims by the employee's supervisor or manager before it is submitted for reimbursement.
* Randomly checking expenditure directly with the supplier and verifying the invoice and payment
Ask any employer the biggest mistake candidates can make and you often get the same answer - not being fully prepared for the interview. Successful candidates use every conceivable means possible to prepare for the interview and to allow themselves ample time to prepare. They understand that interviewing is a skill and that preparation and practice will enhance their chances of success.It’s a fact that preparation can make the difference between successful offer, or disappointment and rejection. One easy method of preparation is to rehearse the interview in your imagination, before the event, using the Successful Outcome Visualisation Technique. As the name suggests it’s a process where you visualise the event and its successful outcome a number of times, in your head, prior to the interview. The repetition of the successful outcome programmes the mind to automatically r
* 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 approved and paid.
Suggested Controls
* Separation and rotation of duties between the person making the purchase orders and submitting the orders for payment, the person preparing the cheques and banking journals and the person recording the transactions in the accounting records.
* Invoices approved by one person and that person should not draw the cheques or have the authority to order goods or services.
* Using pre-approved suppliers limits the opportunity of using a fictitious business to conduct the fraud. Any invoice from a supplier that is not pre-approved should be verified before payment is made.
FALSE EXPENSE CLAIMS
These frauds involve the person inflating expense claims, making false or multiple claims for the one expense, or claiming a personal expense as a business expense. Whilst the amounts are usually so small to be noticed individually they should not be regarded as insignificant as they can have a large cumulative effect on the business.
Suggested Controls
* Require employees to submit detailed expense reimbursement requests including original receipts and supporting documentation and provide proof that the claim is for business purposes.
* Authorisation of expenditure reimbursements claims by the employee's supervisor or manager before it is submitted for reimbursement.
* Randomly checking expenditure directly with the supplier and verifying the invoice and payment
One of the coolest jobs is to become a designer of consumer products and there is good pay in it. Think of the people who designed the Norelco Razors or the Automatic Tooth Brush or the iPod. Very fun stuff no doubt and all those we have interviewed love their jobs and liken it to designing futuristic cars for GM, Ford, Ferrari or Jaguar.Even former aerospace workers, NASA scientists and race car designers have in fact enjoyed their careers so much that they become designers of a different type after retirement. What do all these people really consider when deciding what types of careers they can make their second claim to fame in? Believe it or not they choose toys. Why you ask? Well because they can put their full creativity into it without hard core project managers debunking their concepts and designs.And you know what it seems to be working too as would you j
* Separation and rotation of duties between the person making the purchase orders and submitting the orders for payment, the person preparing the cheques and banking journals and the person recording the transactions in the accounting records.
* Invoices approved by one person and that person should not draw the cheques or have the authority to order goods or services.
* Using pre-approved suppliers limits the opportunity of using a fictitious business to conduct the fraud. Any invoice from a supplier that is not pre-approved should be verified before payment is made.
FALSE EXPENSE CLAIMS
These frauds involve the person inflating expense claims, making false or multiple claims for the one expense, or claiming a personal expense as a business expense. Whilst the amounts are usually so small to be noticed individually they should not be regarded as insignificant as they can have a large cumulative effect on the business.
Suggested Controls
* Require employees to submit detailed expense reimbursement requests including original receipts and supporting documentation and provide proof that the claim is for business purposes.
* Authorisation of expenditure reimbursements claims by the employee's supervisor or manager before it is submitted for reimbursement.
* Randomly checking expenditure directly with the supplier and verifying the invoice and payment.
HTTP = HTML link (for blogs, profiles,phorums):
<a href="http://www.hubyou.info/article/43255/hubyou-Common-Small-Business-Frauds--Suggested-Controls.html">Common Small Business Frauds & Suggested Controls</a>
BB link (for phorums):
[url=http://www.hubyou.info/article/43255/hubyou-Common-Small-Business-Frauds--Suggested-Controls.html]Common Small Business Frauds & Suggested Controls[/url]
Related Articles:
Be Easily Recognized With a Postcard Advertising Campaign
Big Cash From A Home - Based Business
Bookmark it:
|