Maintaining Financial Records
As the amount of money involved in a business firm is huge, it is extremely essential that a record of all the income and expenditure is maintained. By managing financial records, every asset of the company and funds can be traced and accounted for. The books maintaining the accounts of the organization must have a mention of all the transactions made under the name of the company so that, no one can play with them and any missing link can be easily identified.
Dividing Bookkeeping Duties
A bookkeeper is responsible for recording and maintaining financial transactions of the company. Companies with good financial standing can hire more than one bookkeeper so that bookkeeping duties are equally divided and one bookkeeper can easily identify mistakes of the other and none of them gains the courage to play with organization’s funds. Someone from the management of small scale companies can take up one or two bookkeeping tasks rather than completely relying on the bookkeeper so that he/she is not able to perform any fraudulent act.
Signing Authorities
Most business firms make their payment through checks. To prevent fraud, all outgoing checks must be signed by two people who have the rights to sign checks for the company. In no case, the person preparing the check should have the signing authority because this would give undue advantage to the person thereby, increasing the chances of fraud. Canceled and void checks must be kept separately and mentioned in the records. Bank statements must also be in place so that all payments can be tallied and the entire process can be supervised.
Conducting Surprise Audits
Audits and inspections are a great way of keeping a check on illegal activities going on within the organization. Surprise audits help in identifying loopholes in the financial accounts and taking necessary action against it. Conducting surprise and regular audits not only helps in identifying criminal activity, but also instills fear of being caught among employees who have the tendency of doing such illegal activities.
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