| Introduction | | | | customer is going to go through with the |
| QuickBooks is by far the easiest program to use | | | | arrangement, if you are using the invoice feature |
| with the most complicated and diverse applications | | | | to send estimates, those estimates are posting to |
| in it that never get used by most business | | | | your accounts receivable account which should |
| owners. Fraud happens every day and as I have | | | | not be done. |
| said before, small businesses lose more money | | | | So how would someone commit fraud by altering |
| every year due to fraud than some of the | | | | an invoice? If the same person that prints the |
| largest corporations. What a lot of Fraudsters, | | | | invoices also sends the checks, it is very easy to |
| who happen to use QuickBooks don't know is | | | | print the invoice for your approval at $200 or |
| that every move they make, every step they | | | | more than what was actually invoiced for. Once |
| take, is being 'watched' by the QuickBooks | | | | you've approved what should be a $5000 invoice |
| software. | | | | for $5200, the clerk will change the $5200 to |
| Prevention | | | | $5000 and send the vendor the right amount, and |
| The key to preventing fraud of course is making | | | | at the same time issue themselves a check for |
| sure that it is not the same person who handles | | | | $200 which would be written off to another |
| more than one accounting function in a business. | | | | account somewhere in the books. The bank |
| You don't want the same person who is opening | | | | reconciliations would always match and no one |
| the mail, being the one who sends the checks. | | | | would be the wiser. This is one reason that you |
| You don't want the same person who can sign | | | | cannot print an invoice without saving it first. |
| checks being the one determining the amounts to | | | | Another common method of fraud is altering the |
| put on the checks. | | | | payee of existing invoices to benefit the relatives, |
| Upon setup, QuickBooks allows the business | | | | friends, etc of the crooked clerk. So an invoice |
| owner to set up users. The owner should always | | | | may come in that has been created at home and |
| be the Administrator, not the bookkeeper, not | | | | submitted to you for payment by the person |
| the CPA or accountant, but the Administrator. | | | | creating the invoice. Or, you may be cutting a |
| Anyone else using the program can be limited to | | | | check for a legitimate expense only to have the |
| the parts of the program that they can access | | | | funds redirected to the crooked clerk. |
| by the Admin. Sales persons needing to enter | | | | You might also be on the lookout for checks |
| sales can do so, but they don't need access to | | | | being issued for identical amounts, during the |
| the bank account information. Purchasers need to | | | | same period every week, every month, etc. |
| be able to create purchase orders and invoices, | | | | Sometimes the fraudster will send two checks to |
| but not able to adjust inventory on hand or | | | | the same vendor and call up a day later and ask |
| create checks to pay for invoices. Only the admin | | | | the vendor to return the check 'mistakenly' sent. |
| should be able to make these adjustments. Name | | | | If the fraudster is the same person who opens |
| the users of QuickBooks so you know who is | | | | the mail, he will take the check and 'wash it' and |
| doing what and when. This will give you an eagle | | | | make himself the payee. (If your bookkeeper |
| eye on the security of the QuickBooks | | | | seems to be continually doing her nails, you smell |
| transactions. | | | | nail polish remover constantly, your company is at |
| Detection | | | | risk as that is what is used to remove ink off of |
| There is a little known feature of QB that is called | | | | checks) You can catch this by exporting the |
| the Audit Trail. The Audit Trail records any | | | | check detail to Excel and sorting it according to |
| changes made to original transactions, any | | | | amounts, if you have one or two more checks a |
| deletions of invoices, checks, etc. You'll want to do | | | | month for identical amounts, call your bank and |
| this when the place is closed or when you have | | | | ask for a copy of the cashed checks, front and |
| plenty of time because this report can take a | | | | back. The back of a check tells you which bank |
| very long time to generate. Go to the Reports | | | | cashed it, and often, the name of the person who |
| tab on the menu bar and click on it. Find the | | | | cashed it as well. |
| Accountant's Reports and you will see the Audit | | | | If you get your bank statements already opened |
| Trail as one of the options. Click on it and apply | | | | by your bookkeeper, watch for checks that have |
| the dates you wish to check, (the longer the | | | | cleared but that aren't placed into the envelope |
| period of time and more transactions, the longer | | | | with the statements. Compare your bank register |
| the report will take) and wait. | | | | to the images of the checks on the statements |
| In the audit trail, if an entry has been altered or | | | | and confirm that the person or company you |
| deleted there will be two or sometimes three lines | | | | wrote the check to is the actual person or |
| for one transaction. The one on the bottom is the | | | | company that cashed the check. |
| original entry, the one(s) above it have been | | | | Conclusion |
| altered or deleted and the report will give what | | | | If you take the basic precautions, it makes this |
| was changed, the payee, the amount, or an | | | | kind of fraud much harder to commit. But you |
| account and tell you which user entered the | | | | have to be vigilant and ready to take action |
| original, which user changed it and the day and | | | | should fraud be occurring in your business. |
| time it was done. | | | | Remember, however, that this is America, home |
| So how do you tell if it's fraud or just someone | | | | of the Free Land of the Lawsuit. NEVER directly |
| making changes? First, deleting an invoice should | | | | accuse your bookkeeper of stealing, especially in |
| rarely be done, if there are a large number of | | | | front of others. Find the services of a Certified |
| deleted invoices then chances are, your company | | | | Fraud Examiner in your area and they will be able |
| is not using the Estimates icon. The invoice should | | | | to help you put a successful case together for |
| only be created when you know for sure a | | | | prosecution, should you choose to go that route. |