Signs of Accounting Frauds And Their Prevention

An accountant’s main job is to uphold the laws and regulations. Accounting fraud habits are exploding everywhere. The reasons to could be the lesser number of employees and the dealings are done close to the owners. However, any company is vulnerable to fraudulent practices. Any dishonest person or a cheater can find his way out to apply his cheat codes in any financial status of the company. There could be accounting for stock options, pension plans and many present options. Only small companies outsourcing their accounting needs are not able to face these technical accounting challenges. Though still the potential for fraud lies everywhere.

Some common signs when somebody is indulging into fraud can be find out when he is giving any extra hours to the company. Frauds are easy to accomplish during hours when you are not supervised or monitored. There could be another sign when the person refuses to follow general accounting guidelines. A reliable bookkeeper manages records, payroll, receipts and deposits and so on but if it doesn’t match at the end of the month that should be the first place you need to put your attention at. Also if the direct supervision on all company’s financial operation is being neglected.

To prevent yourself from the frauds you need to document the fundamental pay outs and revenue procedures that can identify the number of people involve. You should keep a track of spending habits in the office premises. They should authorize all expenditures to prevent the money being used personally. The revenue and cost of every transaction is needed to be measured and properly documented to protect it from any negative practices.

With all the increasing frauds and knowing the results we wonder why they even think of doing it. There are highly intelligent and well respected men of society who lie, cheat and commit fraud. It can be assumed that the reasons behind changed behaviors could be the pressure from the investors who expect a huge rate of return for their investing dollar. Most of the investors are greedy and expect them to produce big numbers. It is the duty of corporate accounting to monitor managers. As managers are instrumental in the production of accounting numbers and it is costly to monitor their behavior in this regard firms indulge themselves into fraudulent accounting numbers.