In recent news – Bookkeeper Sandra Balfour was jailed for stealing nearly $2 million while working for a Brisbane car dealer. !!!!
How does this happen?
One of the many challenging parts of running a business is making sure that you have good internal controls in place. If these controls were in place at the Brisbane car dealer, then they wouldn’t have lost nearly $2 million dollars.
So, what are these internal controls? Read more to find out
KPMG Fraud Survey Results
The latest KPMG Fraud report in Australia has found there has been a 3-fold increase in major fraud during the past 15 years, with $373 MILLION LOST IN THE LAST TWO YEARS ALONE. A massive 45% of 281 companies surveyed have experienced fraud, with the finance sector being the worst hit.
The KPMG survey found an 82% increase in individual fraud cases exceeding $1 million lost or more. Although the evidence from the survey showed fraud is rising significantly, only 15% of business owners said they see fraud as a critical risk. Losses like this can mean losing your business, which is very concerning.
To stop this type of fraud, I will share with you three great tips to ensure that your bookkeeper isn’t stealing from you.
Remember, in this case where the Brisbane Car Dealer lost nearly $2million dolaars, they won’t be getting that money back, there is no insurance that covers this loss.
Who can afford to lose $2millon Dollars?
Three Great Tips on Internal Controls to Stop Fraud
To stop this type of fraud, I will share with you three great tips to ensure that your bookkeeper isn’t stealing from you.
Remember, in this case where the Brisbane Car Dealer lost nearly $2million dolaars, they won’t be getting that money back, there is no insurance that covers this loss.
Who can afford to lose $2millon Dollars?
#1. How did Sandra Balfour steal nearly $2 million?
1.A sentencing hearing in the Supreme Court in Brisbane was told that Sandra Balfour had been a bookkeeper for more than 20 years and was a “trusted employee” who had access to the company’s accounts and payment system.
Our recommendation:
What you do here is only give your bookkeeper limited access to your bank account. When you need to organise payments, make sure that there is an accountant or owner to authorise the payments and its understood what the payment is about. This is an internal control process, called segregation of duties; one person should not be able to organise the payment and authorise the payment as well.
#2. How Was Sandra Balfour Able To Steal$2 Million Dollars
2. The court heard that over an eight-year period , Sandra made a “large number of discreet transactions” to herself totalling $1.89 million, disguising the transfers by labelling them with generic terms to not “raise a red flag”.
Our recommendation:
You need to ensure that you always match any payments with a copy of bills, knowing what exactly you are paying, are you paying wages, super or suppliers. You need to ensure that you have another person check and match the paperwork with the payment.
#3. How Did Sandra Balfour Avoid Detection To Steal $2 Million Dollars
3. To avoid detection, the court heard that she used another employee’s login information to generate the payments and then used her own details to authorise them.
Our recommendation:
Your team needs to be educated about company policies and not give out their login to others. Also, your IT team needs to have your employee change their login details at least every 90 days. And if someone leaves the company, their logins need to be deactivated.
If fraud hits your business, you will fully understand the need for internal controls. So, its best to develop simple systems to be put in place in your business to stop fraud now. Whether you are a sole trader or you have many employees, introducing these internal controls will ensure that your business runs more efficiently, resources aren’t lost, and there are fewer unpleasant surprises in your life.
You hold the key to installing these internal controls, and this video has given you three great tips to stop fraud from occurring in your business.
