You’re right if you think you’ve heard it from us. We can’t say it often enough: Internal controls can be the lifeblood of your business. It is far cheaper to prevent fraud than it is to suffer a loss.

Are you establishing proper controls?

Let’s assume that you’ve taken our past advice. Approved department managers who do not write the checks, sign the checks, and carefully review the backup documentation; the monthly bank statements and canceled checks are scrutinized by your CFO or your accounting manager and are reconciled monthly. The daily bank deposit is prepared by someone other than the cashier or accounts receivable clerk. You have an approved vendor list, and it is updated monthly. You compare actual expenses to your detailed budget to check for anomalies. All employees who handle company assets are bonded. Your managers know to report significant changes in an employee’s lifestyle, and all employees have a way to report fraud to the management either directly or anonymously. By instituting these controls, you’ve taken major steps to protect company assets.


This isn’t the time to get complacent. Cash is tight for everyone, and anything that can be converted into cash, or can replace a cash expense, deserves further attention. We don’t suggest you start counting paper clips, but there are tell-tale signs to alert you that measurable theft is occurring. For example, are you suddenly ordering three times as many boxes of file folders as you normally use? Lots of office supplies that hang out in the supply cabinet can easily be converted to cash by an employee who is under financial stress.


Your receiving and shipping departments are other potential leaks. For incoming deliveries, it’s important to catch shortages and report them to suppliers so they can be more vigilant at their end. Once it is known you have internal controls to catch such variances, you will be less likely to become the victim of this practice. If your customers complain they have received short-shipments from you, it is a siren going off that something is amiss in your operations.

LSL CPAs has a team of professionals that are qualified to investigate the allegations, document the theft, and prepare a report to provide to your insurance company as well as law enforcement agencies. Take more control of your internal controls! If your suspect you are a victim of fraud, call your LSL advisor today.

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