Last week, we talked about the 3.5 Creative Accounting (Fraud) in Creative Agencies and got a ton of interest from our readers wanting to learn more about it. So, today I want to address 3 quick wins that you can do today to greatly reduce the risks of theft.
3 quick wins to prevent accounting fraud
#1: Reconcile, reconcile, reconcile.
Accounting is an honest attempt by the business world to help us understand our financial health. It’s part art and part science with a ton of rules and regulations that can quickly get away from you. The only reality we have to check our records is the actual money that flows in and out of our banks – and that’s exactly what the reconciliation exercise is designed to do. It ties our accounting records to a reliable version of reality. Make sure you have someone who’s not doing the day-to-day bookkeeping in charge of this, at least on a monthly basis. It’ll save a ton of headaches down the road.
#2: Those who move cash shall not record!
Many entrepreneurs make the mistake of thinking that all things money-related should go to a single “numbers person” in the company. That’s a recipe for disaster because that single person can pretty much do anything he or she wants and cover their tracks easily. They are the police, judge, jury, and cleanup crew. Even if you don’t have a sophisticated accounting ecosystem in our company, it should still be pretty easy to find at least 2 people to put their hands in this cookie jar. One to move actual money (probably the owner) and one to do the accounting.
#3: Implement reimbursement policy
If you pay a stipend or reimburse your staff for any expenses, the very least you can do is to ask them to send you copies of the receipts. Even if you don’t really go through them, the act of “asking” encourages team members to think twice about asking for reimbursements that are inaccurate. Keep things simple and speedy by setting up quick rules, such as “receipt only required for expenses above $50” or “reimbursements are issued every Friday.” By sticking to policies and a schedule, employees will learn to adjust to rules and timing. The less “one off” reimbursements you do, the less likely a mistake will slip through and the more effective your team can be.
There you have it. Accounting processes can be complex and may appear tedious at first, but it is always better to have things done right and on a preset rhythm. All 3 of these things can be implemented within just a few days and I can guarantee an immediately positive return. Your accounting records will be cleaner, risks of theft greatly reduced, and your team will be overall more effective in carrying out their tasks. The investment is minimal and the return is great – give it a shot and let us know how it works out.