Why auditing your own business is a good idea
- Monday, 27 March 2017
According to the Association of Certified Fraud Examiners (ACFE) the Construction Industry suffers only 3.9% of the fraud schemes in the United States. However, the industry holds one of the highest median amounts per fraud: $259,000. The great number of contractors, consultants, partners and employees make it difficult to keep things in check. But not all is lost, if you regularly audit your own company, you can avoid fraud and save millions in the process. Here are a few pointers on how to achieve this.
Putting all of your eggs in one basket renders your company very vulnerable to fraud. All it takes is for one employee, contractor or consultant for fraud to take place. Here are a few ways you can prevent fraud:
Company culture
We have written about company culture multiple times in the past. The truth is if your company has a set of prominent values and everyone on the team shares them, then your employees have a built-in loyalty towards your business. An employee who is happy and satisfied with her responsibilities is likely not only to do everything right in the job, but also to defend it from possible threats.
Use digital apps to process expense reports
How do you control expense reports? Nevermind pencil and paper or expenses presented in bulk. Sign up for a digital expense solution provider. Ask your employees to always scan receipts and upload them to the app. Also, they should include a small description of the transaction. If the payment was done online, they can include a screenshot. When possible, provide employees with fixed limit debit cards so their payments can be automatically registered on your bank account with all of the establishment's information.
Use online banking
If you rely on traditional mail to get your bank statements, think again. Use online banking; you can check all of your transactions in real-time without having to wait for your monthly statement to arrive. Also, online numbers cannot be altered by someone in your team, something that can easily be done on paper and enough skills.
Avoid employing a single person for all banking duties
Split banking responsibilities between two or more people. If you give a single person access to all of your financial and fiscal information, you run a great risk.
Avoid assets being used for personal benefit
Computers, cars, trucks and other equipment can easily be used for personal benefit without even thinking about it. At the end of the day, it's easy to use a truck to drive around and run personal errands or use work computers for personal information storage. Avoid risking company information or running high gas bills.
Conduct regular audits
As a great housekeeping practice, conduct regular audits in your company. You can do this every quarter or every year, depending on how much information you handle. Hire an external CPA to do the job. Also, ask them to recommend a fraud-proof accounting system that can be customized to your needs.