Fraud protection requires diligence

Edmonton accounting consultant Jo Anne Kebernick would have an easier time of her specialty if some people didn't try to play games with the system.
Speaking about business records and fraud prevention at a recent Alberta Agricultural Societies conference, she emphasized the need for control measures to prevent and spot fraud, whether intentional or through carelessness.
"Some people are always looking for a way to use the system to get a bigger piece," she said. "They're not getting enough out of it."
Accounting systems for nonprofit groups and business need to verify all financial information, she said.
Verification can be as simple as division of duties where different persons do accounts payable, receivables and deposits to ensure one person can't doctor the books or as tedious and time-consuming as counting every shipment received to ensure orders were filled correctly.
Use purchasing orders for all buying, use spending limits on purchases, and check everything.
She advises never to use presigned cheques. That is just an invitation to fraud.
Reconciling accounts and petty cash should be done by different people to avoid one person controlling too many facets of the accounting process.
From within the firm or organization, she encourages control by forms with preprinted numbered forms, printed deposit books, credit memos and a voiding procedure to ensure cheques and orders are genuinely voided and recorded.
Three forces - the good, the bad, the ugly - affect accounting.
It's good to use matching, that is, check on hours of work claimed, on billing and items received, packing slips, quotas and actual prices.
Match bank deposits, withdrawals and payments.
Do the math for GST, and when you pay GST check the GST online registry to make sure the tax is legitimate.
Small operations that are exempt from GST occasionally charge the tax and pocket the proceeds, she said.
The bad side of accounting includes late billing practices, hard-to-read or understand invoices.
The ugly side involves scams by mail, phone or e-mail attempting to sell unneeded or undelivered goods or obtain credit card/ bank information to steal identity and cash.
The federal Competition Bureau keeps a list of current frauds and alerts on the website at www.competitionbureau.gc.ca.
Expense claims should be backed up with original receipts
"It's your money, protect it."
All cash use needs a paper trail.
Computers make accounting simpler with fewer errors, and software programs can use audit controls for invoices, cheques and tracking.
Photocopy everything for the paper trail, Kebernick said.
Most operations hit by fraud say, 'We never saw it coming.'
Signs of possible irregularities include unusual personal behaviour, inventory loss, chaotic paperwork, ghost employees on payrolls or expense claims, large supplies of stock, irregularities in financial reports, or their timing, and frequent credit memos.
Prevention involves supervision by knowledgeable people, proper training and resources, regular reviews of financial and audits
Do background checks on employees and show appreciation for their work, she said.

Ron Walter can be reached at 691-1264.