Jesse H.

What is Fraud?

Fraud is a deliberate misrepresentation that can cause a person or business to suffer money loss. These elements are usually considered to be fraud, although if someone lied about their name, for example, it would not be considered fraud unless they caused someone else to lose money or suffer other damages. There are many different types of Fraud such as Identity theft to insurance fraud to falsifying tax information, and making false statements. Fraud is normally defined as " abuse of position, or false representation, or prejudicing someone's rights for personal gain". But simply fraud is an act of misleading another for personal gain.

15 Ways to Minimize Fraud

1. Perform a background check on all new hires.

2. Requires two signatures on checks.

3. Never pre-sign checks.

4. Do not allow one person control over all accounting functions.

5. Consolidate checking accounts.

6. Eliminate petty cash.

7. Have an outside auditor edit your books.

8. Use a computer program to enter all financial activity.

9. Use Budgets.

10. Looks for ways to improve.

11. Watch employee hours and overtime.

12. Watch corporate stock and inventory, including supplies.

13. Watch expense accounts.

14. Verify credit card charges.

15. Routinely review bank statements.

20 Ways to Detect Fraud

1. Unusual behavior.

2. Complaints.

3. Stale items in reconciliations.

4. Excessive voids.

5. Missing documents.

6. Excessive credit memos.

7. Common names and addresses for refunds.

8. Increasing reconciling items.

9. General ledger out-of-balance.

10. Adjustments to recievables or payables.

11. Excess purchases.

12. Duplicate payments.

13. Ghost employees.

14. Employee expense accounts.

15. Inventory shortages.

16. Increased scrap.

17. Large payments to individuals.

18. Employee overtime.

19. Write-off of accounts receivable.

20. Post office boxes as shipping addresses.