In today’s competitive business era, the number of frauds is increasing every day. Small and mid-sized companies are more prone to fraud than larger organizations because one employee executing various functions across the organization and the close relationships between junior employees & managers leads to less inspection and the results can be destructive. No accounting system should run on employee trust alone and no employee should ever have control of all three primary accounting functions of authorization, record keeping and custody of assets.
Outsourcing accounting is one of the simplest methods to prevent fraud. When companies outsource their accounting needs to an independent professional, a fresh set of eyes are reviewing all the transactions while working on your data. In this case the outsourced CFO/Accountant/Bookkeeper would automatically question the nature of these charges because they are obviously not of a business nature.
In this blog we are focusing on various types of frauds which takes place due to improper accounting services and how outsourcing helps reduce fraud:
1. Cheque Tampering Fraud-
When an employee forges or alters a cheque drawn on an organization’s bank account, the crime is called cheque tampering fraud.
Outsource accounting services can help in preventing this kind of fraud by dividing the job responsibilities between two employees where in one employee is responsible for making and collecting payments and other employee is responsible for reconciling the books and verifying the reported amounts are proper or not.
2. Skimming Fraud-
This happens mainly where there are cash transactions in a business. The employee who handles the daily cash receipts of a business skims some cash and reports lower cash transactions or deletes the transaction.
This fraud can be prevented if you Send cash payments directly to an outsourced accounting firm or start utilizing automated clearing electronic funds transfer payments.
3. Payroll Fraud-
When employee tampers with their time punching, the hours an employee has worked with access to the attendance register.
Larger the business lager the complexity of payroll function, which requires to be outsourced. Outsource your payroll to experts which will be reviewed qualified and trained resources to ensure accuracy
4. Billing Fraud-
Billing fraud occurs when an employee submits personal invoices for fake goods/services to the company for payment.
An outsourcing partner can help you to prevent from this kind of frauds by matching invoices to the purchase orders also by scanning bills and linking them to the matching transactions in accounting software.
Conclusion- Let’s face it; Hiring an accountant for small business is costly instead, you can outsource your accounting services. Outsourced accounting services can help you get organized, reduce the amount of time it takes to review the financial health of your business and detect employee fraud. Outsourcing also provides an immediate relive from the accounting duties and provides peace of mind to a busy business owner.