It is common for financial managers, particularly new ones, to dislike dealing with their own accounting process. By nature, managers are big-picture people, while accounting is notoriously detail-oriented. This leads many bank managers to hire an accounting person, and then breathe a sigh of relief: “That’s over, now we can move on to the stuff that matters”. Unfortunately, according to entrepreneur.com, 50% of business owners have experienced employee fraud. The good news is, there are some things you can do to reduce the chances of fraud while largely retaining your hands-off approach to accounting.
How To Protect Yourself?
According to an article by entrepreneur.com, as well as the professionals at businessknowhow.com, the following are ways to set yourself up for a fraud-free workplace, while not burdening yourself with the day-to-day minutiae of bookkeeping.
Run financial background checks
Most financial institutions already have this in place, but some hiring managers are unsure what to look for. The articles mention that people in financial distress are the most likely to commit workplace fraud. Many people have suffered financial setbacks in recent times. The candidates that present the most substantial threat are those whose financial difficulties are recent, or about to come to a head.
Set up a clear code of ethics
A strong code of ethics, presented early on in the employment of a new worker will go a long way toward setting up a workplace environment that is unfriendly to fraud. Train new employees in your institution’s code of conduct from day one.
Segregate Your Accounting Processes
Both articles mention the folly of having the same employee opening the mail, handling the bookkeeping, making the deposits, and managing the accounts. Few entrepreneurs have a budget for this many employees in the beginning, so stick to this rule of thumb: The person who inputs the transactions should not be the person who oversees your accounts, and vice versa.
Set up a way for employees to report unethical behaviour anonymously. You may have to sort through some pettiness this way, but most incidents of fraud that have been caught and stopped were done so because one employee reported the suspicious behaviour of another.
These tips can help you reduce the incidence of fraud, while not increasing your presence in the accounting process. However, be sure to insert yourself into your finances enough to occasionally audit books and oversee financial complaints. In the end, if you have set up your company for success, carefully hired the best people, and followed a few rules of thumb, you should be able to step away from the accounting process, while still ensuring that all of your money goes where it belongs.
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