Fraud in Small Businesses

Amy Clements, CPA at the EFP Rotenberg, joined Mark Gruba on News 8 at Sunrise Monday.  She talked about protecting your small business from fraud.

Here are 5 simple ways that a small business owner can tighten controls to prevent and detect fraud, according to Clements:
1. Segregation of Duties: Management should receive and open and review the bank statement directly before another employee reconciles.
- Management can often look at a glance at the bank statement activity and tell if it's accurate because they know the business intimately.
- Inverse relationship here: The lower the number of employees, the higher the monitoring by management
 2. Job Rotations: Switch the roles that each employee performs - accounts receivable, payable, payroll and billing
 3. Safeguard Assets: Lock the check stock so that only management can access
 4. Use of Authorizations: Require all invoices on expense reimbursement
 5. Increasing awareness and sets a tone at the top:
 a. Tone/environment should be on of honest and integrity
 b. Communication of policy of zero-tolerance for fraud to employees
 c. Whistleblower policy - do employees know where they can go if they need to tell someone.