9 How to prevent financial fraud in multi-branch businesses

9 How to prevent financial fraud in multi-branch businesses

According to a report by the American Association for Fraud Investigation (ACFE), on average, each business loses about 5% of its revenue because of fraudulent activities. However, only 35% of businesses apply proactive corporate governance practices to prevent fraud.

Here are 9 methods to prevent financial fraud that CEOs can actively apply in their businesses, especially useful for multi-branch businesses.

1. Assignment of responsibilities

Do not assign a single employee to control an end-to-end financial transaction. A check writer will never be a person who signs a check.

2. Examine bank statements

Do not give a person in a position of embezzlement a chance to destroy or remove evidence of wrongdoing.

3. Keep a close eye on your company’s checks

Don’t be careless with corporate checks. Keep them in a locked drawer and don’t give the keys to anyone.

4. Personally sign each paycheck

Doing this can take a while, but it’s worth it. Check the checks to make sure they are issued to people you know.

5. Keep a close eye on the receipts

You should arrange a minimum of two or more employees to count and verify earnings.

6. Allow accountants to rest

An employee is embezzling the fund always trying to hide the theft. Many business owners are astonished to discover that the employees at the branches who seem so loyal – because they never take a day off and never get sick – are the real stealers.

7. For regular book audits

If you want transparency and assurance from within your company, you should start building an internal audit department. Along with independent audit, internal audit is considered a consultant in all management and business activities.

8. Understand your accounting records

Fraudulent embezzlement often occurs when the accounting records are not clear and the oversight is loose. This makes it easy for employees to keep cash and receipts. As a business owner, you must know your company’s bookkeeping system well and restructure the entire bookkeeping system if necessary.

9. Use accounting software

Using accounting software or a comprehensive corporate governance system is the way many businesses use to prevent financial fraud.

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