How can I identify accounting fraud?

Accounting fraud occurs when a company employee steals or hides money. Potential perpetrators of this type of fraud can be anyone from the accountant to the financial director. The purpose of fraud can be personal gain, hide business errors or incompetence. There are three common accounting methods: payable accounts, receivables and dummy accounts. All three methods allow the perpetrator to remove money from business. These checks can be paid to existing, legitimate suppliers or Shell Corporations created simply for these checks. The process for this type of fraud is quite simple.

False invoice is paid through the accounting system and processed check. The employee or co -prosecutor is chasing the check and takes the money. Look for this type of fraud by checking the inspection register and comparing it to the original invoices. Explore any unknown names and question the frequency of payments.

Fraud with account receivables includes receiving cash payments from customers and not inserting money on the company's bank account. Instead, a credit note is issued to the customer's account so that there is no call to the customer. This method of fraud can be identified by reviewing credit notes issued to clients and confirmation of the reason why they were issued. This type of fraud can be quite complex to follow, because there may be more credit notes for several clients to hide the amount of stolen cash.

Fraud with a financial statement is usually on a much larger scale than the first two types of fraud. This type of fraud is only possible to members of higher management. Fictitious companies are created within the corporation and the money is around the complex of transactions.

Money is paid for these other related companies for imaginary work or consulting services. Upper leadership or their family members often own these corporations. This method is used to fromParticipation of very large sums of money for a longer period of time. To find this type of fraud, check the details for any related companies that receive transfers between them.

There are several audit software packages that help in detection of accounting fraud. The most effective way to identify fraud is to move employees. Obligations of shifting within the accounting department without prior notice and pay attention to changes in behavior.

To identify extensive fraud, check out personal spending habits and lifestyle. People who commit accounting fraud often spend richly but avoid prolonged absence of work. They are defensive when asked about current business practices. They are also very resistant to any changes in response, which limits their access to cash or production control.