Accounting For You
Shopping Basket
Your Basket is Empty
Quantity:
Subtotal
Taxes
Delivery
Total
There was an error with PayPalClick here to try again

Accounting and Bookkeeping for Small Businesses and Sole Traders
Chartered Management Accountant, Certified Practising Accountant
and Registered Tax Agent
My Blog
Blog
Measures to Minimise Risks on Payments
Posted on 17 July, 2015 at 0:06 |
![]() |
A few years ago I joined an international
company as a regional Finance Manager and managed to uncover the fact that my
predecessor had been embezzling funds from the company. Unfortunately you only
need to watch the news to know that this kind of thing happens all too often.
What companies need is better measures in place to minimise the risks of this
sort of thing happening. Having had personal involvement in such a
matter, discovering the ways in which the embezzlement happened, I now have
some good examples of the security measures that should be in place to help
ensure that this type of fraud can’t happen or go undetected: Corporate Credit Cards With any employee using a corporate credit card
it is important that all the costs expended on the card be approved by a
manager. However, it is especially important that checks are put in place when
it is the Accountant, or the Finance Manager, or someone senior in Finance
(depending on the size of the company) who has a corporate credit card. Since
they would usually be the ones who are verifying the use of any other employee’s
cards, ensuring management approvals etc. it is important that someone independent
to the finance department, another senior manager, be the one to approve and
verify the Accountants use of the card. Online Banking Any online banking payments should require two individual
approvals before the payment can be made. One of the approvals can be from the
accountant but the other should be from a different manager, someone outside of
the finance/accounting team. This manager should be given the payments report
from an accounting system and/or copies of all the relevant invoices/paperwork.
This will allow them to verify the payments being made before approving them.
It is always a good measure to have at least three people with online banking
approvals so that if one is away there are still two who can do the approvals. At no time should
online banking passwords ever be shared. Suppliers and Invoices Where possible, the person who sets up a new
supplier/vendor on the accounting system should be a different person than the
one who enters the purchase invoices. This helps to ensure that no “dummy”
suppliers or invoices can be entered. Suppliers Bank
Accounts Random checks should be made by those approving
the payment of invoices to ensure that the bank accounts that the payments are
being made to match the bank account details given on the invoices. Petty Cash Ensure that the petty cash tin is audited by
someone other than the person who issues the cash on a regular basis. Ensure
that all issues of cash have been duly authorised and that the receipts and the
cash total up to the balance of the float. Cash Flow Allowing for seasonal adjustments the cash
flows of most companies will be reasonably consistent with the occasional spike
for such things as income tax payments. Keeping a check on the cash flow should
therefore help to indicate if something is amiss, especially if the expenditure
suddenly starts looking high in comparison to the income. Expense Accounts Are the costs on any of the expense accounts in
the P&L suddenly looking much higher than they usually do? While there
could be a legitimate reason check it out as potentially it could indicate “dummy”
costs being entered and paid for. Follow Through Above all, follow through on any queries you have made to the accountant (accounts department) about any concerns you may have. Insist on an answer and don’t just let your query be ignored. |
/