Posted on: May 16, 2019 by Huntersure
Fraud is on the rise all across the country and across many industries. From personal tax returns to companies taking advantage of their clients, fraud continues to be a major issue. In New York, there are already efforts to combat fraud in state taxes, meaning the alarm bells for fraud, in general, are already sounding.
On average, it’s estimated that organizations lose around five percent of gross revenues and 30 percent of fraud cases take place in smaller businesses. So, what’s the answer to target fraud from all angles and find the right solution? Well, there really isn’t one short answer, but there are measures that can be taken by accounting professionals to make sure fraud is detected and limited.
While detecting fraud can be time-consuming, putting the right feelers out there to stay ahead of the ball will help to limit exposure to risks. Accountants can be proactive in tracking down and preventing fraudulent transactions before they happen.
Here are a couple of examples of major fraudulent activities and how to detect and limit them.
Fraudsters, either internally or externally, can also commit fraud through billing schemes like duplicate systems. This occurs when multiple payments are made on one invoice. When companies who keep things above board receive duplicate payments on an invoice, they typically reach out to the customer or client and take care of overpayment issues with them directly. When someone acting fraudulently is contacted, they will ask that the refund be given back to them and intercept the payment before negotiating the refund check payment.
Spotting duplicate payments and looking into them more thoroughly will help an accountant avoid their own liabilities as well as protecting the company from the fallout of fraudulent payments. The risks shouldn’t fall on the accountant, but there is accountant professional liability insurance to keep CPA’s safe when this occurs. Accountant professional liability insurance acts as a safeguard against the financial issues related to fraud as this can become a costly thing to handle down the road.
As most businesses know, financial statement fraud can be one of the more expensive fraud types and committed using a number of different techniques. From fraudulent journal entries to rounding numbers incorrectly, this kind of fraud can go by undetected. To limit this, accountants can use spreadsheets to separate transactions rounded to the nearest dollar amount and look for any discrepancies on weekend financial reporting. By doing this, suspicious transactions can be detected early and often and dealt with accordingly.
At Huntersure, we specialize in providing quality professional liability solutions to accounting professionals. Our Accountant Liability Insurance program provides coverage for accountants, auditors, bookkeepers, and tax preparers, so no matter where your clients lie in the industry they can have the coverage they need to protect themselves and their assets. To learn more about our operation and our Professional Liability Insurance solutions, contact us today at (855) 585-6255.