Minimizing payment fraud–Eight Proactive Steps for Your Business

Filed Under Blog, Fraud Prevention, Internal Control, Uncategorized · Tagged:  

Workplace fraud can be anywhere. Employees may pilfer small items from the
office or embezzle hundreds of thousands of dollars. All too often, business
owners are oblivious to wrongdoings, or they simply refuse to acknowledge the
possibilities – until it’s too late.

You have worked hard to get your company to where it is. Don’t let fraud reduce
the profitability and ultimately the value of what you have built.

Recently I was interviewed for Bank of America’s Small Business Online Community
regarding “Payment Fraud: What to Watch Out for and How to Prevent in Your Small
Business.” I thought you may find it of interest to read the eight practical
points that I mentioned during the interview. These are summarized below.


Here are eight proactive suggestions for thwarting payment fraud:

1. Limit the number of people authorized to sign checks.

2. The business owner personally should open the check statements from the bank
to keep tabs on what has been paid.

3. Consider using an independent or outside CPA to reconcile bank statements.

4. Create a budget at the beginning of the year and track [transactions] by
month, if there are unauthorized transactions, they may stick out.

5. Have a clear process in place to review and approve new vendors into the
accounting system.

6. Use positive pay. With positive pay an electronic list of checks that were
drawn by the company is sent to the bank. The bank matches this list against
checks that are presented to the bank for payment. If a check is not on the
list, the bank will not pay it.

7. Signature plates and stamps—should be kept locked up with only a limited
number of people who can access them.

8. Perhaps one of the most important practices is separation of duties, where
the person who writes the checks shouldn’t be the person who reconciles the bank
account, or prepares the checks, or mailing out the checks. . It is a
fundamental control to have different people involved in the process.

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Crain’s NY Business quotes Jack Craven

Filed Under Fraud Prevention, Internal Control, Uncategorized · Tagged:  


The linked article from Crain’s New York Business may be of interest. It quotes me several times regarding employee fraud.

 No one wants to think that an employee of his or her small business could be a crook. But the fact is that employee fraud is a particularly big problem for U.S. companies with a head count smaller than 100.

 Click on the link that follows to read the entire text of the article:


 Our firm specializes in helping businesses to become more profitable. Please call us (516-280-8363) if you are interested in learning how we can help your business. 


Jack Craven, CPA

Preventing Employee Fraud: 10 Simple Ideas for Reducing the Risk

Filed Under Fraud Prevention, Internal Control, Uncategorized · Tagged:  

To Our Clients and Friends

The unfortunate Madoff scandal was extraordinary for its sheer size and audacity. It reminds us that malfeasance (doing bad things) occurs in all sorts of organizations of every shape and size.

So make sure that you have taken every reasonable precaution to prevent fraud or theft in your company, and that, in the event it does occur, you are adequately protected by a surety bond.

Attached is a checklist which we have developed for reviewing your internal control system.

Please call us if you are interested in discussing this further.


Jack Craven and Victor Lee

Fraud Checklist

Fraud is a potential threat to every company. Here are 10 simple ideas for reducing the risk of employee fraud.

1. Develop a code of conduct that explicitly prohibits employees from committing fraud, having conflicts of interest or engaging in any other form of illegal or unethical behavior. Ensure that all your employees, vendors and customers get copies of it. Have key employees provide annual confirmation of their compliance.

2. Have a clear company policy on time and expense reporting.

3. Verify the credentials of all new vendors before they are authorized to supply the company.

4. Make sure all disbursements are properly approved.

5. Use direct deposit for payroll.

6. Require two signatures on checks over a certain amount.

7. Review the bank statements before anyone else does. Consider having them sent to your home address. Review cancelled checks (or copies) and match payee names with endorsements. Review invoices for any payees you don’t recognize.

8. Make sure bank statements are reconciled each month and that your CPA reviews the bookkeeper’s work periodically.

9. Make sure everyone takes their full allotted vacation time and be suspicious about anyone who appears to live beyond their means.

10. If something seems odd, whether it is a disbursement to an unfamiliar vendor or an unexpected expense, check it out and don’t accept a casual explanation.

Good internal controls require judgment and careful planning. Please feel free to call us if you have any questions.