Small businesses tend to be vulnerable to fraud because they have weak internal controls. Business owners can be too trusting, too busy chasing new business or too short-staffed allowing procedures and systems fall by the wayside.

Internal controls may be less sexy than winning a big contract, but they are just as important to the long-term potential of your business. No amount of sales wins will help if your bank accounts or inventories are being methodically depleted. In this article we look at six ways you can protect your business.

1. Segregate Accounting Duties

By assigning the various steps in your accounting process to different people you not only ensure oversight and catch mistakes, you also prevent fraud. Basically, this approach requires two people to collude to hide a transaction, making theft much more difficult.

You should aim to separate record keeping, authorisation and custody of assets. So, for example, the person who receives goods at the warehouse should not be able to sign the cheques to pay for those goods. The person who sells a product should not be responsible for recording the sale or receiving the payment.

2. Second Signature – even online!

We recommend that, unless you are making all payments personally, you require two signatures on payments, including online payments. At the very least, this should be required on payments above an agreed amount. This reduces the likelihood that someone will write improper cheques to themselves or a fictitious company.

3. Match Receiving Report against Actual Inventory

A receiving report documents the contents of a delivery and should be filled out by the staff member receiving a shipment. All arriving inventory should be counted and inspected and a receiving report prepared to document the quantity and condition of goods received.

The accounts department can now compare the receiving report with the purchase order and invoice and ensure that the business does not pay for items not received or returned as damaged.

4. Surprise Inventory Counts

Predictable controls can be easy to dodge. Rather than simply having a year-end stock count, implement surprise inventory counts at odd times of the year. The element of surprise will act as a good deterrent. If employees know that a stock count could happen at any time, they are less likely to risk theft. If something has been taken, you will know about more quickly than if you wait until year-end.

5. Scrutinise Business Bank Accounts

It’s important to stay in touch with your business bank accounts. We recommend that you have as few bank accounts as possible. If multiple accounts are required, exercise extra caution.

Reconcile your bank accounts daily. Ideally as a small business owner you should do this yourself. Yes, delegation is important. But taking personal responsibility for account reconciliation not only prevents fraud, it helps you keep your finger on the pulse of your business.

6. Have Internal Controls Audited by an Expert

Too often business owners fail to set up internal controls because either they don’t have time to think about it, or they’re not sure where to start.

An excellent place to start is by bringing in an expert to audit your current systems, identify weaknesses and recommend internal controls to protect your business.

HQB’s Fraud Prevention Service is one such option. The service includes a thorough systems audit by one of our 3 ASIC registered company auditors. We physically observe the operation of your business, providing an audit of what’s actually happening, versus what you may think is happening. A Risk & Control Matrix report follows, highlighting the areas of risk and recommending internal controls.

If you have questions about fraud, internal controls or HQB’s Fraud Prevention Service please contact us. Our team is here to help.

Posted 09.10.2019

 This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.

What Our Clients Say

HQB have been providing accounting services to our family for a long time and they are always prompt, efficient and thorough. The advice given has been a great help. Thank you HQB.
Bob Prater
Bob Prater
06:01 30 May 22
Outstanding service, sorted out my complicated setup and gave me peace of mind.I had great experience with HQB, no problems at all.Thank you
Hamish
Hamish
07:22 21 Apr 22
Great service! Came recommended through a friend! Would definitely recommend.
steve hanley
steve hanley
23:20 16 Mar 22
I was referred to James & the HQB team around 2016. James has been fantastic - always available when advice is sought, explains options clearly and moves quickly when I request documents in most unreasonable timeframes. It's also comforting dealing with someone who has local knowledge is very much part of the community. I have no hesitation recommending him and the team!
Mindy
Mindy
06:49 07 Feb 22
I have been with HQB since ACSM was merged...so long ago i cannot remember. Their service has always been good and this has been elevated to excellent since James Davis took over my account. He is super sharp, good at listening and prompt in response to enquiries. I recommend HQB.
Paula Fursman
Paula Fursman
22:54 01 Feb 22
I met James Davis from HQB about 6 - 7 years ago when we were looking for an accountant that would suit our needs better and provide the advice that would steer us into the future.At the time I sat in front of James and fired so many questions, scenarios, future plans etc and James did not bat an eyelid. There was no let me get back to you on that one, or good questions I will check the current legislation, it was a variety of questions that led to us setting up a structure that has allowed us to grow with absolute confidence we are structured appropriately.This relationship has grown from strength to strength and i would have no hesitate to refer anyone to HQB as I am confident they will have the exact same experience and get the advice they need when they need it.Thanks for the amazing service guys and quality advice.
Daniel McCarthy
Daniel McCarthy
03:12 31 Jan 22
I found the team relaxed but very professional. All work was conducted in a correct and timely manner. Communications from Brad and this team are of a high standard and they follow up.You get great prompt service at what seem to be standard industry charges
Darryl Tebbutt
Darryl Tebbutt
05:58 07 Jan 22
HQB accountants are the best. They have pointed things out to me that my previous accountant didn't. They got me set up and straightened out all my accounts to ensure I was complying with with regulators. I now know my accounts are in good order. Would recommend to those who like to sleep at night knowing someone has got your back!
Paula Berti-Duncan
Paula Berti-Duncan
00:53 29 Nov 21
James Davis and the team are great to work with.We are very happy with the service and value.THANK YOU
Philip Wilson
Philip Wilson
02:57 23 Nov 21
As a business owner, I love using HQB for my accounting maters. It makes life much easier. They are professional and supportive, allowing me to focus on the business.
Adrian Betts
Adrian Betts
21:30 18 Nov 21
HQB are the best accountants I have worked with in more than thirty years of business. We transitioned from a small one person accountant to a large accountancy firm, where we got lost amongst the bigger businesses with deeper pockets and louder voices, and charged like there was no tomorrow. HQB is the perfect middle ground where we get excellent and up-t0-date advice but treated and cared for as an SME with growth potential. The personal service is amazing. The advice we get even better. VERY HIGHLY RECOMMEND!
Sales Rider
Sales Rider
23:57 15 Nov 21
Have been dealing with James and his team for the past few years.Always a quick response with a helpful answer.You definitely have my YES vote in business.Thanks for the assistance
Robert Brunnekreef
Robert Brunnekreef
09:19 15 Nov 21
HQB is an excellent accounting firm, we have worked together for over 20 years now. I cannot recommend them more highly and James Davis offers a very personal and professional service, second to none. Great communicators and are always available promptly with support and advise.
Dan Maher
Dan Maher
01:05 15 Nov 21
Have been working with James from HQB for the last couple of years - and only have good things to say. Very responsive, offers support where needed and hangs back in other areas that we can manage ourselves. Best accountant we have worked with - makes it a breeze, which is what you want when working on the paperwork.
Kevin Doye
Kevin Doye
00:42 15 Nov 21
Great service, nice and easy to deal with, fast on jobs. 5-star business for sure!
Felix Wong
Felix Wong
00:39 15 Nov 21
James and the team at HQB are always helpful in what has been a very busy approx 2 years in Covid conds, well done!!
Richard Welch
Richard Welch
23:47 14 Nov 21
Ian and his team are the best. Thanks HQB.
todd armstrong
todd armstrong
05:07 08 Nov 21
I'm really enjoying the personalised touch and service I'm receiving from Ian and Siarn. Always prompt, professional and happy to answer my silly questions and help me stay informed. I've been a client of Bill's and HQB for about 20 years. Since Bills retirement he passed me on to Ian and the quality of the service just seems to keep getting better. HQB comes highly recommended by me.
Trent Allen
Trent Allen
03:43 25 Jun 20
We highly recommend the team at HQB. We are a Sydney based business, and we find the team highly professional, responsive, and just a pleasure to deal with. They are very proactive and we feel as though we are a valued client. Well done to Brad Sheaves and team HQB !
Alastair Fysh
Alastair Fysh
04:31 25 May 20
HQB accountants have been an asset to our business. They have made Job Keeper a breeze and kept our business strong. They respond to emails quickly. They have been terrific value for us as they have brought knowledge and expertise that I don't have even if I had the time to do my accounting. They have taken the time to understand my business and structure our finances accordingly.
Kyle Maloney
Kyle Maloney
06:19 22 May 20
Amazing service from James (& Brianna), going well above his responsibilities to his clients. Cannot recommend James highly enough. HQB a highly professional and responsive accounting firm. Incredibly quick at responding, yes, often after hours, which is more than we would ever expect from any professional. I am continually recommending James to friends and family. Many thanks James. Kind regards, Lyn (& Jeff) Green
Jeff Green
Jeff Green
01:02 17 May 20
James became our Accountant last year and he has handled all our entities swiftly and pro actively. We are incredibly impressed with him and HQB and feel very comfortable in their hands to manage our Business. James is always prompt in replying and sometimes out of hours and his handling of our recent predicament with COVID 19 has helped us manage our Business successfully through this trying time. Thank you James and the team at HQB. We will always recommend you highly,.
Pandora Colledge
Pandora Colledge
01:36 15 May 20

Get In Touch

Call us on (02) 6652 2333 or enquire below

    Your Name (required)

    Your Email (required)

    Subject

    Your Message

     
    360

    Days left until the new financial year. Get your tax sorted today. Click here to get started.