Prevent Bookkeeping Fraud

By November 13, 2013 No Comments

Bookkeeping (or occupational) fraud costs the typical organization 5% of its revenues each year. The median loss caused by occupational fraud is $140,000, and often the fraud occurs for a median of 18 months before detection.

Surprised? Probably not. And you likely won’t be surprised to learn that fraud is a more significant threat to small businesses than to their larger counterparts. Increased threat is due to a lack of prevention, company size, limited resources and fewer anti-fraud controls. It is also a greater threat to small businesses because a company in a nascent growth phase is significantly less flush, making the impact deeper and more painful.

Anti-fraud controls have been shown to produce significant decreases in the cost and duration of occupational fraud. It’s worth it to review your fraud controls. It could prevent thousands of dollars in losses over time. Almost 50% of organizations that have experienced organizational fraud never recover the losses.

… It’s not surprising that fraud in the workplace increased during the economic crisis and recession. The median loss tied to occupational fraud is $160,000 … so the issue is something about which many companies are rightfully concerned. Small businesses are especially vulnerable. (The Huffington Post, June 5, 2012)


Occupational fraud is a significant threat to small businesses. The smallest organizations in our study suffered the largest median losses. These organizations typically employ fewer anti-fraud controls than their larger counterparts, which increases their vulnerability to fraud. (Scott Patterson
, ACFE Senior Media Relations Specialist)

Cautionary tales tell us that regardless of your company size or industry, we never should presume we’re immune to bookkeeping fraud. In 2010, the Roman Catholic Archdiocese of New York discovered that over a period of seven years, their 67 year-old volunteer bookkeeper at St. Patrick’s Cathedral embezzled one million dollars. From a church.

The threat is real. But the preventative measures can be incredibly simple.

  • Review online banking and transactional accounts daily
  • Reconcile bank and credit card records monthly
  • Control and restrict access to check stock
  • Require a set approval process for check writing and online bill pay
  • Regular review of payroll and a reliable, structured checks and balances process
  • Segregate financial duties
  • If possible, set aside a stand-alone computer used only for banking and transactions (no email, web surfing, etc.)

What other suggestions do you have for monitoring and securing your company financials?

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