The Eyes Have It: Seeing the Signs of Fraud
Would you recognize the clues that your client has been ripped off by one of its employees? Or would management conduct business as usual, blindly trusting their employees?
Companies make the mistake of not actively searching for fraud. They tend to trust their employees and trust the procedures in place to safeguard company assets. It may be good business to trust employees and empower them to make real contributions to the growth of the company. However, it is not wise to turn a blind eye to signs that a trusted employee may be stealing.
How do companies protect themselves? First they must examine their financial statements and look for unusual variances and situations. Next, the detailed accounting records must be examined. Some signs of fraud are easy to spot, such as bank accounts that haven’t been reconciled for long periods of time. There are other signs, such as improperly recorded transactions, adjusting entries at the end of accounting periods, and computer activity at unusual hours.
Issues with incompetent managers may also be a sign of fraud. Managers with problems such as poor planning, poor delegation, inability to meet goals, or ignorance about the company’s business may be more likely to commit fraud. Override or disregard for controls and procedures are also a cause for concern.
Full article here.
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