6 Quick Ways to Reduce Fraud Risk Using QuickBooks

Growth businesses typically can’t afford to hire enough people to have proper separation of duties to gain the internal controls needed to prevent accounting fraud. However, every business owner can achieve accounting fraud prevention by taking these simple steps:

1. Open the bank statement yourself

Every small business owner should receive the unopened bank statement and review each check for authorized payee and signature, and approved electronic payments, before you give it to the bookkeeper.

2. Don’t let your bookkeeper reconcile the bank account

The person who pays the bills should never reconcile the bank account. That’s how they cover their tracks. If you don’t have someone else to do it this is an easy function to outsource.

3. Close the prior accounting periods

QuickBooks now has a way to lock down the prior periods. Once you produce a financial statement that period should be “closed”. This reduces the risk of hiding a fraudulent transaction in a prior year.

4. Attach scanned images to each accounting transaction

Most fraud occurs from check tampering – the bookkeeper changes the payee to themselves. Prevent accounting fraud by scanning the bill and linking it to each accounting transaction inside QuickBooks. This makes it harder to fake a bill.

5. Set up a username for each user

QuickBooks now has an audit trail report which can never be turned off. However, if your staff log in as “Administrator” you have no idea who made what entry.

6. Restrict user access

QuickBooks Enterprise Solutions has the ability to restrict access per user per screen. Make sure you have separation of duties between authorization, record keeping and custodial responsibilities for each accounting transaction.

No system of internal control should be built on trust. The best accounting practice is to separate out the following functions: authorization, record keeping, and custodial responsibility for assets in each accounting transaction.