Fraud Control

Here are some tips...
1. Establish a plant and equipment register, ensuring that all equipment is recorded in this register;
2. Ensure that all plant and equipment is marked clearly, showing ownership by the business. Ensure that these markings are not able to be removed easily;
3. Create a policy which outlines the circumstances when equipment may be used, rules regarding its use and its return;
4. Ensure that the name of the employee or contractor using the plant or equipment, and reason for such use, is recorded, including date used;
5. Ensure that the business audits its plant and equipment regularly and investigates when it is missing.

Here are some points;
1. If you set a budget which accurately reflects regular costs or expenditure, or for a specific project, it then becomes another yardstick or measurement tool for reconciliation against actual cost, and the identification of areas of concern;
2. Where expenditure does not reconcile with Budget, this could be a symptom of a problem involving fraudulent activity.
3. Take the time to review these reports in details each week and at the end of the month;
4. Ensure that all reports reconcile. If they don’t seek answers. Investigate until you are satisfied with answers;
5. Budgets along with other strategy, also act as a deterrent.

Here are some tips;
1. Ensure the business has a policy, or set of rules regarding;
2. When cheques are drawn ensure they are authorised and signed by the authorised person;
3. Ensure receipts reconcile with each claim;
4. Ensure there is regular reconciliation conducted;
5. Ensure all transactions are entered into correct accounts in the business accounting system

Here are some tips:
1. The business must have a purchase and account payable system in
place to reduce the following:
• Wasteful expenditure;
• Short supply of goods;
• Supply of inferior goods;
• Payment for services and goods not supplied;
• Purchase of goods for private use;
• Kickbacks for biased selection of suppliers;
• Payment to ‘bogus’ vendors for false claims;
• Cheques written for cash only;
• Cheques not properly authorised;
2. Ensure:
• Acknowledgement of receipt of goods and services is promptly forwarded:
• At least 10 per cent of daily direct payments are checked against appropriate documentation;
• Regular follow up is maintained, by receipting areas of all non-receipted items;
• Employees performing accounts payable and stores functions receive appropriate training to ensure compliance with policies;
• Segregation of duties exists between purchasing, receipting, authorisation and paying functions;
• There is exercise of delegation monitored by supervisory staff;
• Managers monitor compliance with policy and procedures;
• Expenditure is authorised by a senior officer and is not outside of approved limits/expenditure guidelines;
• Expenditure is supported by required appropriate documentation, i.e.: original invoice, order number details, original delivery docket;
• Accounts have not been paid previously;
• Cheques are not written payable to ‘cash’.

In the area of salaries, wages and overtime payments there exists a number of business risks which include:
• Fraudulent claims for expenses; (e.g. travelling)
• Fraudulent salaries and wages input documents;
• Fraudulent recording of attendance and time;
• Fraudulent overtime claims;
• Payroll ‘ghosts’;
• Unnecessary overtime;
• Over-award payments.
Ask yourself the following questions?
1. Does the business have adequate supervisory review and control?
2. Are claims properly authorised?
3. Are attendance records maintained?
4. Are adequate controls exercised by wage clerks?
5. Are salaries and wages input documents checked by another manager
within the process?
6. Are wage clerks experienced?
7. Do employees continue to seek additional loopholes in the award?
8. Do unchallenged long standing practices exist?
9. Are allowances paid for days absent from work?
10. Are there segregation of duties in the payment system?
11. Are salaries and wages randomly checked?

There are risks in the use of contractors and consultants. These risks include:
• Bias toward particular contractors;
• Disclosure of sensitive information to contractors;
• Improper approval in the awarding of contracts;
• Biased tender evaluation;
• Payment of fraudulent claims;
• Kickbacks for biased selection of contractors;
• Payments to ‘bogus’ contractors for false claims;
• Bona fides of contractors not checked or deliberately overlooked;
• Employees acting as contractors under false names.

Book keepers should never be a risk within your business, if you adopt the proposition that they are there for the two following reasons:
Many business owners assume that Book keepers are employed to undertake financial control. I.e. Control business funds. This is not correct. The role of a Book keeper, Accounts Payable person, or Financial Controller are, and always must be segregated. Book keepers do NOT:
Make your Book keeper reports to you on a weekly and monthly basis. Formal reports should include inter alia:
Reports must be produced directly from your accountant software. Use these reports, on a weekly basis to manage your business. For example, check that payments made, reconcile with your bank statement, which reconciles with your bank reconciliation. Use your Book keeper as an auditor, reporting to you, and assisting you to manage. Make this clear when they are recruited. Ensure your accountant receives your financial reports data quarterly and reviews it, providing you feedback regarding the accuracy of your Book keepers reporting. Remember! Never let your Book keeper have full access to your money.

Here are some tips....
1. Persons who handle cash in your business should be adequately supervised where practical;
2. Where practical, there should be segregation of duties between persons who handle cash and persons who bank and/or reconcile cash;
3. Train staff in formal cash handling procedures;
4. Tills or Cash Registers must accurately record all transactions, including the itemisation of stock or services purchased;
5. Each person operating a till should be identified through password, at the time of the sale, and opening the till or cash register;
6. No bills or accounts are paid from the till or cash register;
7. Daily audits are conducted which ensure total sales, less start float reconcile with receipts;
8. “No Sale” records reflect tills or cash registers being opened without receipt. This should be investigated, and staff questioned;
9. Till or Cash Register records should identify all stock sold. This should reconcile with stock on hand identified through stock take.

The business should identify every task. Once it does this, each task should be delegated to a particular individual to complete. A system of reports is set up to ensure that each task is being undertaken and done so, to the required level.

Here are some tips....
1. Always keep your business cheque book/s secure, and only accessible by authorised persons;
2. Ensure only the minimum number of persons are authorised to sign cheques. Usually only the business owner/s. In some cases make cheques “two to sign”;
3. Cheques are only issued, after written authorisation (authority to pay an account);
4. Cheques are made payable only to the Payee outlined on the invoice, or employees correct name;
5. Cheque butts are accurately completed;
6. Cheque butts reconcile with bank statements.

There are a number of signals, which tend to indicate the potential for fraud. Refer to the following fraud indicator list and indicate if any of your staff are exhibiting the following:
1. Illogical excuses and reasons for unusual events or actions;
2. Senior staff involved in "junior" work, such as purchasing, ordering and receiving;
3. Excessive staff turnover;
4. Staff not taking leave;
5. Potential or actual conflicts of interest not declared;
6. Excessive number of duties residing with one person;
7. Undue secrecy, or excluding people from available information;
8. Staff treating controls and standard practice as challenges to be overcome or defied;
9. Failure to conduct reference checks of staff prior to employment;
10. Unauthorised changes to systems or work practices;
11. Missing documentation relating to client or business financial transactions;
12. "Blind approval", where the signatory does not sight supporting documentation;
13. Duplicates or copies only of invoices;
14. Alterations of documents such as day books log books and timesheets.

Here are some points;

Here are some points;

Here are some points

CODE OF CONDUCT is a documented reflection as to the way that the business attempts to cover any issues of potential misunderstanding concerned with its Employee relationships and business philosophy. A CODE OF CONDUCT states the organization’s position on the issues that it considers to be important criteria, such as equality, ethics, contracts, conflict of interest, work methodology and duty of care. Often these matters are overlooked in the process of doing business, only to surface later and cause problems because they've not initially been properly explained or understood. Being able to provide a solid and fair code of practice is therefore important in order to establish a clear common understanding of expectations and deliverables between the business and an employee.
It is usual that a CODE OF CONDUCT will address the following areas:

✓ Professional Conduct;
✓ Personal Presentation;
✓ Confidentiality;
✓ Intellectual Property;
✓ Media enquiries;
✓ Use of Social media;
✓ Ethics;
✓ Equality and discrimination;
✓ The acceptance of gifts;
✓ Employment in Conflict;
✓ Disclosures of personal interests;
✓ Telephone and vehicle use;
✓ Drugs and Alcohol;
✓ Assessment through Personal Performance & Appraisal.