Tips For Avoiding Fraud In Business Financial Reports

Business and Finance

Running a business is certainly not easy. Especially about the matter of processing finances well. Even though the task of financial management has been handled by Sydney bookkeepers, financial report fraud still often occurs. This should be watched out for because fraud is done with an intentional element.

Therefore recording cash flows such as financial reporting must be considered properly. The company’s financial statements are very vulnerable to fraud. If there are fraud financial statements will certainly endanger the sustainability of the business being run. As a preventative measure, here are some tips for avoiding corporate financial statement fraud:

1. Using Accountable Software
Currently, many startups sell software for accounting or data management. All can adjust to the needs of the company.

This software will help companies overcome accounting or bookkeeping problems, including financial statement fraud. Besides, the use of software can be a possibility that your staff will cheat will be smaller.
That is because the software will work according to the system. For example, your staff wants to cheat the balance sheet into a loss, even though the company’s position is profit. Of course, this is not possible. The financial statements that are issued are automated so it is not easy to tamper with it carelessly.

2. Tightening the Implementation of SOP
Financial report fraud can also be prevented by tightening the implementation of SOPs. It is still often found if SOPs are considered to be limited to theoretical rules so they are ignored. It could be because the deadline given to complete the task is too short, so that makes the SOP is done according to the procedure.

It is precisely this SOP that is skipped over that causes a gap to commit fraud. For that, the company needs to tighten SOPs for employees. Maybe by giving rewards and punishment.

3. Perform Employee Recruitment Process Carefully
Employees are the biggest investment for the company. Therefore, during the recruitment process, try to choose very carefully. Choose the closest to the best qualifications, to get quality candidates. Especially the employees of the finance department because later they were in charge of making financial reports.

Be sure to recruit bookkeepers who have an honest and full responsibility for the job. That way, it is very unlikely that employees will commit fraud. Avoid choosing employees by collusion. For example, choosing based on kinship with old employees.

4. Provide an Internal Control System
The company must also provide a clear internal control system. Starting from the assignment of duties and authority of each employee. This is useful so that there are no misunderstandings in carrying out the task and reducing the abuse of authority.

Concerning the financial department, it might be possible to do it by separating the authority of recording and saving money. So specifically for those who record financial statements are not allowed to hold money. So the level of cheating can be minimized.

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