Signs of Accounting Fraud

Accounting fraud does not just happen to major corporations. The reason they think is because they own small businesses with few employees. The one who handles the money is close to the owner of the company. In other words, they all sit in the same office together. But this doesn’t mean anything. It doesn’t matter what size of a company you have, because accounting fraud can happen to anyone.

 

The next obvious question to ask is how to recognize accounting fraud so it can be stopped before it is too late? Here are signs to look for:

 

1.      The accountant works for a long time without supervision. He handles all aspects of a company’s financial operations. This can pose quite a major risk.

2.      The accountant refuses to follow any recently applied accounting guidelines. In this case the owner has to demand that the accountant follow the procedures and guidelines put in place or risk termination. Also, in this situation, the owner may have to investigate the books for not the current year but all the preceding years the accountant worked for the company.

3.      An accountant works with no breaks. He refuses to take any time off when it is granted to him. Plus, the accountant comes in and works on the weekends on a consistent basis, or demands that he take work home to complete.

4.      The accountant has to insist that he or she handle and maintain all activities that other departments normally deal with. For example, the accountant may get involved with picking up mail (so as to hide anything that might encourage suspicion with management), acting as the middle-person with banks, creditors, auditors, over the company’s financial matters.

5.      Management notices certain files are misfiled. This may include payroll receipts, deposit tickets, or sales receipts.

6.      Deposit slips look too small for the amount of business the company is doing. In this case, managers should always keep on top of what the company brings in and what deposits go to the bank.