8 Essential Steps To Prevent Employee Fraud

Author: Peter Goldmann - CFE
1. Mandatory Review
Commence a formal review process wherein a department manager or human resource manager reviews employees’ reports.
2. Constant Inquiry
Always do an inquiry on expenses that appears to be fraudulent. Waiting for a bigger issue to arise will be a more tough and costly affair to resolve later.
3. Formal Disbursement
Make sure that all the money disbursements are made in a formal manner either through payroll or accounts payable. Cash should never be advanced to employees, if possible.
4. Implement Corporate Cards
Implementation of corporate charge cards would provide greater control as it allows companies to query each card individually to ensure that every payment are being made against them.
5. Get Credit Activity Report
Collect credit activity reports from the issuing company on a monthly basis, if using corporate charge cards as these reports are helpful in determining the number of charges that are being cancelled or credited back to each account. Comparing this activity with the actual expense reports will serve to determine accuracy.
6. Annual Audit
Conduct annual audit of a sample of employee expense report to ensure they meet the company’s established guidelines. Ensure that appropriate documentation exists to support the expenditures that were requested. If a company card is used, confirm that the balance is being paid at the exact time.
7. Be Consistent
Be consistent in treating the reimbursement activities by making the employees pay the expenditures and seek reimbursement, or by making the payment by the companies directly. Dilly-dallying between the two could end up in duplicate reimbursement to occur.
8. Prosecute
Prosecute offenders, who are found to be forging their expense reports. If they are saved from punitive actions, others will follow their actions.

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