I won’t bore you with all the stats but the fact is that Small & Medium sized companies are as vulnerable to fraud as any other companies.

Business owners must demonstrate that they are watching the money (their money) even if it might appear they are greedy! So here are a number of recommended do’s and don’ts if you are a small business owner:

  • Don’t leave cash or checks lying around.  All monies (except for small amounts for drawers & petty cash) should be deposited daily.  Be aware of what’s on that deposit slip whether or not it is hand written or system generated.  All employees should see that you and they must respect the inflow of cash and exercise stewardship over it. 
  • Don’t allow easy access to company credit cards, personal credit cards (yours), gas cards, warehouse clubs, etc.   
  • Don’t SHARE PASSWORDS.  Always have your own password to your accounts.
  • Do Require a daily report of deposits and how they were entered into the system (build an Excel report if necessary):

                              Payments on account

                              Vendor refunds


                              Cash Sales

  • Do have online access to your Bank. Log on daily and review your balances.   Mark the 1st day of every month to look at your checking account on line and view all the checks that were written.  If you don’t have time for this (and you should make time) DO NOT delegate this to the bookkeeper(s).  Delegate to another individual you trust.

                              Is that your signature (or an authorized signer)?

                             Who is the payee?  Do you recognize them?

                             Does the ending balance make sense to you?

                             Be sure to review ALL ACH and Wire Transfer activity

  • Do require monthly Bank Reconciliations that you must sign off on or initial. 
  • Do restrict who can set up new vendors and new employees in the system.  These are really ‘soft’ spots where businesses become vulnerable to fraud
  • Do review your Payroll reports:

                             Do you recognize the employee names?

                             Do the hours worked look reasonable?

                             Is your payroll becoming bloated?

                             Be sure payroll taxes are being paid and other employee elected withholding is ending up where it belongs:

                             e.g. 401K contributions, 401K matches, life insurance premiums, extra withholding & misc. deductions.

  • Don’t ever hire someone in a cash management position (your bookkeeper, cashiers, etc.) without doing a background check.  It will be money well spent and there are a number of on-line companies that can provide this service at reasonable rate.

The incidence of bookkeeper fraud is wide-spread and the amounts they are able to steal are considerable.  But bookkeepers are certainly not the only employees to be wary of.  Remember, whatever you may have heard about Internal Controls to protect your assets, TRUST is not an internal control.  Finally, take advantage of your accounting firm to help you maintain the required oversight to prevent losses from theft.  It will be well worth it.  



  • 2015-09-16 10:21:34
  • Judith Sherling
  • Best Practice, Cash, Controls