One costly mistake that many organizations incur are duplicate payments of invoices. In many cases this occurs for regularly recurring expense items such as rent, utilities, internet service, dues and subscriptions. If there is no file for tracking payment of these commonly recurring items, there is an increased risk that these items may be paid in duplicate, paid late or overpaid.
As many auditors know, the flexibility and ease of use that makes Quickbooks popular among small businesses is also a source of risk. Quickbooks entries can be manipulated or deleted by employees who are trying to conceal or cover-up a fraud. In response to this, Intuit, the developers of Quickbooks, have built-in various features over the years to try and provide accountants and auditors with tools to mitigate these risks. Here are some of the functions and reports that auditors and managers in the organization should use to maintain control over the books.
This is a repost of a story that I heard while attending my annual professional ethics update.
Do you ever have clients say something like "We did some [accounting] stuff wrong last year (month, week, etc.).
A recent embezzlement scandal in the news headlines involved an employee ordering goods that were personal in nature on the company's account with a PC supplier.
Cases of employee theft and embezzlement continue to rise as a result of the economic turmoil of the past year. Many organizations tend to turn a blind eye to the risk of employee fraud until they become victims.
It is quite common in smaller organizations to ignore controls over the purchasing function and rely completely on the controls over vendor invoice approval and check disbursements.
A lack of accountability over the handling of receipts at the register puts both the organization and its employees at risk due to a lack of accountability. If multiple employees can access the same register it is impossible to assign responsibility to individual employees for handling cash receipts. This can lead to a major dilemmas if the till comes up short and suspicion is cast upon the employees without anyway to assign responsibility for the defalcation.
Failure to reconcile bank accounts is one of the most common risks that small organizations face. This puts the organization at risk for many types of misappropriation of cash as well as increasing risk of accounting errors.