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The economic conditions of today have caused a huge increase in fraudulent acts by not only employees who work within an organization, but also outsiders who have a relationship with the organization. Surveys have shown that during the last 12 to 16 months, nearly one third of organizations around the world have been the victim of some sort of economic crime.
Though there are many types of fraud, the following are some basic and easy to implement measures that can help reduce the chance of check fraud.
Separation of Duties - As you probably are aware from going through your audit process, internal controls are important. Having a separation of duties is key to helping prevent fraud. Make sure there is a separation between who enters and who approves invoices for payment. Also make sure you separate the reconciliation process and that bank reconciliations are done promptly.
Check Stock/MICR Checks - Check stock should always be secure with controls as to who has the ability to access the stock. If you use pre-printed checks, you should always make sure that your checks include any available security features that can help detect if a check has been altered. A better solution is the use of MICR checks. When integrated with you accounting software, you have the ability to keep a check stock that does not include your banking information and also control who has access to this information both through controls within the accounting system and controls as to who has access to the printer that is used to print the checks. A special toner must be used for MICR checks. If checks were to be printed using regular toner, those checks should be caught through the clearing system that financial institutions use.
Online Payment Solution - By using an online payment solution, you can not only streamline your invoice approval process, but also greatly reduce who has access to your banking information. Online payment providers typically disburse checks on their bank account, which greatly decrease the number of vendors you have to disclose your banking information to.
ACH and Positive Pay - With this method, you inform your bank which checks you have disbursed and which ACH debits you authorize. Any exceptions are flagged by your banking institution and you can be notified before the item is paid.
Background Checks - It is important to know who you are hiring to work for your organization and even more important to know who is handling the organizations assets. Make sure you are not only doing good reference checks with prior employers but also make sure you are doing criminal and credit checks.
In these tough times, the temptation to commit fraud has greatly increased. You can no longer say that it "can't happen to me" because reality is that it is happening everywhere. You will thank yourself in the long run if you take whatever measures you can to prevent it.
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