1. SAFEGUARDING YOUR ASSETS AND PREVENTING FRAUD
Internal Controls
Segregation of duties
Audit, Review or Compilation
Preparation of bank reconciliation
Proper approval of vendor invoices/original copies
Training/cross-training Senior Mgmt & Employees
Screening & background checks of new hires
Rotation of personnel in clerical positions
Mandatory vacation
Observe employee behavior
Periodic review of procedures
Warning Signs
No vacation taken; first to arrive, last to leave
Employee lifestyle
Employee protection of their work
Lack of internal controls
No sharing info between Senior Mgmt or employees
Bank statements not reconciled promptly
Check stock in open areas and not secured
New vendors added without proper controls
Promotions/transfers declined by employee
Fire drill mentality to complete a report
Vendors call re: lack of payment/service change
Frequent bank calls for transaction verification
Preventative Measures
Engage outside professional to test controls
Engage outside accounting firm for audit
Hire management company
Separate bank accounts
Bank products-positive pay, alert technology
Security features on checks and documents
More than one Senior Mgmt involved
Proper control to add new vendors
Review insurance for Fidelity, Crime, Cyber
Protection of computer hardware & software
Update and review procedures
Cyber Security
Protect computer hardware & software
Dedicated PC-no personal use/open (WiFi) areas
Back-up files/Controls to limit access
Proper use of passwords, token authentication
Use of firewalls, spyware & virus programs
Monitor internet activity
Update software promptly/ Unload unused software
Scan PC regularly for spyware & viruses
Use audit trail in bank programs
Use separate user accounts
Create continuity/recovery plan

2. SAFEGUARDING YOUR ASSETS AND PREVENTING FRAUD
Steps to Take if a Fraud Occurs
Quick & rapid response necessary
Engage a forensic accountant
Seek legal counsel
Contact insurance company or broker/agent
Contact banker
IT personnel should not try to find problem
Maintain integrity of data
Close bank accounts/open new accounts
Call law enforcement (if advised by legal counsel)
Implement new controls/prevent more losses
Cancel credit cards, if necessary
Maintain the integrity of documents
Secure computers used by the perpetrator
Implement continuity/recovery plan, if needed
Cancel personnel who can approve EFT’s
Take action/perpetrator has consequences
Communicate with employees at proper time
Send Form 1099 to the perpetrator
Tips to Remember
Fraud is a crime of opportunity
Fraud can make anyone a victim.
Fraud occurs for many reasons-be aware
Something sounds too good to be true, it probably is
Perpetrators take the path of least resistance
Anyone can be a perpetrator-be aware
Don’t become complacent
Be proactive. Reaction is too late
Behavior is a key point-be cognizant of it
Read all monthly reports
Research other parties in transactions
Never let your guard down
Be aware of s from unknown senders
Create a positive work environment
Train your employees
Don’t be lazy-investigate all incidents
Be sure there are checks and balances
Tone at the top-lead by example