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Fraud Prevention

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The implementation and monitoring of an internal control system is one of the most important deterrents to fraud prevention.  Each year hundreds of businesses are victimized by fraud.  Often the fraud goes undetected for years or maybe never detected.  An effective internal control system consists of both the design of the system and the operating effectiveness of the system.  Examples of specific fraud prevention controls include the following:


Cash Disbursements and Accounts Payable:

-          Bank statements are delivered directly and intact to the owner-manager, who reviews them prior to reconciliation

-          Prepare and review report listing identical vendor addresses for multiple suppliers 

Cash Receipts and Sales:

-          Create a credit policy

-          Review aging of accounts receivable monthly

 Inventory and Purchases:

-          Conduct a complete physical inventory count, at least annually

-          Match invoices with purchase orders and receiving report prior to payment


-          Use direct deposit

 Fixed Assets:

-          Conduct a physical inventory of fixed assets annually


As you review your current internal control systems or if you need assistance in the development of an internal control system – please contact Carolyn Correll CPA, Partner – The Phillips Organization at (330) 493-3928 or ccorrell@phillipsorg.com

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