PROTECTING BUSINESSES AGAINST CASH FRAUDS

Cash larceny is the commonest type of fraud simply because cash is easy to steal and hard to trace. The situation is even more critical for entities with decentralised business units spread far and wide away from the centre of operations. Employees may be tempted to steal money collected from customers without recording the transaction, collect revenue using two sets of receipt books or even issue official receipts and pocket the money. Like all other frauds, cash pilfering occurs where an employee has an opportunity, motive and rationale for fraud. To eliminate or minimise cash frauds, a manager should close every possible window of opportunity. Leaving a window open with cash lying around is tempting even to the most pious including angels. The simplistic way of avoiding cash frauds is to eliminate use of cash in transactions. This is however not practical in an economy where most businesses and people are accustomed to “real money” (cash) instead of cheques and credit cards. Managers should post well paid and trained staff, know all their sources revenue and ensure that cash received at far-off branches is recorded and accounted for using official, serialised and sequential cash receipts. Surprise cash counts and impromptu audits should be conducted periodically. Generic manual receipts should be avoided and use of sequentially numbered receipts should be reviewed regularly. Reconciliation of bank deposits by decentralised locations should be done promptly. If there is no bank in the proximity, the manager should ensure that regular, secure and timely cash repatriation is done using established couriers and a record of each transaction sent to headquarters. A single person should never be left in charge of billing, cash receipting, adjustment and accounting in a decentralised location. Angry, lowly-paid, in-disciplined and poorly trained staff should never be put in charge of far-flung branches. They are likely to steal to get even with the organisation. Without proper financial records, fraud can only be detected as matter of chance and there is no practical method of quantifying the loss in the event of theft. Records make it easier to detect fraud, quantify loss and take action against the perpetrator. Documents are the best type of real evidence for any subsequent prosecution or administrative action against a delinquent employee. Documents leave a trail, tell a story and are dependable. Unlike individual witnesses, documents do not forget or lie and cannot be persuaded or confused.