Are you protected against online fraud? It can hit you sooner than expected.
Hello my friend,
Have you experienced loss of funds in your business through "unauthorised payments?" Not only is it embarrassing for your business but does create a lot of stress and perhaps, financial hardship.
This situation should serve us a reminder to check our own internal processes to prevent this type of fraud which often, is not recoverable. It is not only large organisations that are vulnerable to misuse of their bank accounts, small businesses are regularly hit by unscrupulous use of their banking platforms. This mean it’s incredibly important to get the processes and procedures right. Every business (small, medium or large) should have its own internal processes and procedures in place to minimise risk. These processes and procedures should be tested and reviewed on a regular basis rather than waiting for an incident to occur before testing. By that time, it is too late.
Fraud can be perpetrated from those outside of any organisation, but more often than not, it is people within a company that orchestrate fraud. The fraud triangle reveals the three common reasons for participation - motivation, opportunity and rationalisation.
There is a multitude of ways that fraud can present itself inside a company. Here are just a few signs to watch out for:
A Bogus Supplier - Setting up a bogus supplier in the financial accounting software. They have the ability to set up a supplier in the accounting system and create an invoice for goods the company usually consumes, like stationery. The employee then lists their own bank account details on the invoice and is able to conceal the payments.”
A False Invoice - Raising a false invoice from a pre-existing, legitimate supplier, It is easy to copy an existing invoice but you change the bank details on the invoice. It looks like it is from an existing supplier and most people don’t check bank details.
Payroll - A company’s payroll also presents an opportunity for fraud, with some fraudsters caught “ghosting” or adding a bogus employee to the payroll. Although this is more likely to occur in a large organisation with hundreds of employees or where the person responsible for adding new employees to the system is also responsible for authorising their pay each week.
Company credit card - it is easy for an employee to load up personal expenses, which are then passed off as business expenses. Cash-based businesses are also vulnerable if sales staff choose not to process transactions through the till.
There are many more warning signs to be aware of that can easily erode your bank account.
There are many ways to minimise risk in your business. You do not have to be a large business to set up these simple processes. Small and medium size businesses are at risk of fraud. Outlined below are just some of the ways to minimise the risks in your business.
Until next time, take care.
Cheers,
Peter Adams
Have you experienced loss of funds in your business through "unauthorised payments?" Not only is it embarrassing for your business but does create a lot of stress and perhaps, financial hardship.
Warning Signs
Fraud can be perpetrated from those outside of any organisation, but more often than not, it is people within a company that orchestrate fraud. The fraud triangle reveals the three common reasons for participation - motivation, opportunity and rationalisation.
There is a multitude of ways that fraud can present itself inside a company. Here are just a few signs to watch out for:
A Bogus Supplier - Setting up a bogus supplier in the financial accounting software. They have the ability to set up a supplier in the accounting system and create an invoice for goods the company usually consumes, like stationery. The employee then lists their own bank account details on the invoice and is able to conceal the payments.”
A False Invoice - Raising a false invoice from a pre-existing, legitimate supplier, It is easy to copy an existing invoice but you change the bank details on the invoice. It looks like it is from an existing supplier and most people don’t check bank details.
Payroll - A company’s payroll also presents an opportunity for fraud, with some fraudsters caught “ghosting” or adding a bogus employee to the payroll. Although this is more likely to occur in a large organisation with hundreds of employees or where the person responsible for adding new employees to the system is also responsible for authorising their pay each week.
Company credit card - it is easy for an employee to load up personal expenses, which are then passed off as business expenses. Cash-based businesses are also vulnerable if sales staff choose not to process transactions through the till.
There are many more warning signs to be aware of that can easily erode your bank account.
Remedies to Minimise Risks
- Ensure that your internal accounting controls are strong, especially ones that relate to how money is moved around the business, must be rigorous. Business should also identify the areas of the business most at risk of fraud and focus their attention in improving controls in that space. Test the accounting controls on a regular basis to ensure that they are strong.
- Ensure that each employee, particularly new employees, are aware of the business' accounting controls and implications.
- When it comes to paying suppliers and wages to employees, this means separating out who can raise an invoice and who can pay it or creating a system where a second person is responsible for going over the payments that have been approved before the money leaves the company’s bank account.
- If you run a retail store where there is potential for employees to do cash sales without using the till, create a system where receipts are tallied up at the end of each day and reconciled with the takings in the till. However, if there is no receipt, then there is not likely to be the cash present.
- Check who has access to internet banking and approval limit level.
- Ensure that two people authorise payments - cheques or online banking. One of these people should be a director of the business. Fraud is limited with two people unless both people are working together.
- When an employee leaves the company, remove their access level from internet banking.
- Ensure that each person has the correct approval limit.
- Reconcile the business bank account on a frequent basis, if possible, daily basis.
Until next time, take care.
Cheers,
Peter Adams
Comments
Post a Comment