It is estimated that 3% – 10% of our gross domestic product (GDP) is lost through revenue leaks and fraud. When you consider that many businesses make a net profit of less than 10%, losses form revenue leaks and fraud can make or break a company.
How can you protect your company from fraud? The first step is gaining an understanding of exactly where the risks lie. This will vary from industry to industry, and business to business.
For example, most businesses that deal in cash will usually run the risk that transactions will not be recorded, and that the cash from certain sales transactions will be stolen. If a transaction never makes it into the accounting system, the best that the accounting system can do is to provide indications of theft by means of inconsistent data. But in order to actually stop this type of theft, other means must be used. This might include spot investigations, video data, or other technologies.
Although theft by employees at the lower level is always a risk, theft by mid or higher level employees is usually much more serious and involves higher dollar amounts. This might include thefts of inventory by middle managers, fraudulent expense reports by sales people and executives, or misappropriation and misuse of company assets.
Bookkeeper fraud is a risk in all companies, Many of the methods are classic, and are still employed today. The keys to preventing bookkeeper fraud are having a proper separation of duties, supervision by someone who is educated on fraudulent methods, and a proactive program to make sure that transactions and financial data re being systematically analyzed and reviewed.
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