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More About This Title Preventing and Detecting Employee Theft and Embezzlement: A Practical Guide
English
"If you don't think that some employees have figured out ingenious ways to steal from businesses, read this book. The real-life examples will change your mind." —Joseph T. Wells, CFE, CPA, founder and Chairman, Association of Certified Fraud Examiners
"An easy-to-read, but comprehensive step-by-step approach that covers every potential area for employee fraud and embezzlement. Great checklists at the end of each chapter show what steps to put into place for controls and protection. Includes real-life examples that really 'bring the story home.' " —Jean L. Conover, CPA, past CEO/CFO, Jefferson Radiology PC
"This book is a must-read for seasoned entrepreneurs as well as those considering entering their own business venture. While developed for small business, the risk detection and prevention methodologies presented by Mr. Pedneault are universal to all businesses. The concise checklists provide ready guidance for establishing a complete system of controls."—Denise H. Armstrong, CPA, Chief Financial Officer, Sea Research Foundation, Inc. d/b/a Mystic Aquarium and Institute for Exploration
"This book is a must for every individual owning their own business. Mr. Pedneault clearly articulates the fraud risks that occur in each business system. In the book, he offers practical advice for internal controls and illustrates the risks with real-life examples."—Leonard W. Vona, President, Fraud Auditing, Inc.
English
English
Preface xiii
Acknowledgments xvii
Introduction xix
CHAPTER 1 Hiring the Right Employees 1
Disclaimer 1
Where Do You Start? 1
Advice of Counsel 3
Application Policy 3
Due Diligence 5
Personal Information 7
Past Employment 8
Education 9
References 11
Criminal and Civil History Checks 11
Credit Checks 13
Hiring Time 14
Hiring the Right Employees: Considerations 17
CHAPTER 2 Know Your Employees 19
Why Is Knowing Your Employees Important? 24
Open Communications 25
What Should You Watch for in Your Employees? 26
Know Your Employees: Considerations 29
CHAPTER 3 Sales, Cash Receipts, and Collections 31
Here’s Where Everything Starts 31
Recording and Tracking Sales 32
Collections 44
Debit Memos and Other Adjustments 48
Accounts Receivable 52
Sales, Cash Receipts, and Collections: Considerations 54
CHAPTER 4 Credit Card Sales, Transactions, and Merchant Statements 59
Processing Sales 59
Reconciling Sales 61
Processing Refunds or Credits 61
Reviewing and Reconciling Refunds or Credits 63
Reviewing and Reconciling the Merchant Statement 67
Credit Card Sales, Transactions, and Merchant Statements: Considerations 69
CHAPTER 5 Purchases, Cash Disbursements, Checks, and Petty Cash 71
Purchases 75
Cash Disbursements/Checks 80
Unpaid Bills/Accounts Payable 84
Petty Cash 86
Purchases, Cash Disbursements, Checks, and Petty Cash: Considerations 88
CHAPTER 6 Credit Cards and Debit Cards 91
Credit Cards 94
Debit Cards 96
Credit Cards and Debit Cards: Considerations 99
CHAPTER 7 Employee Expense Reimbursement 103
Expense Submission 104
Where Are the Abuses? 106
Payment Processing 109
Employee Expense Reimbursement: Considerations 111
CHAPTER 8 Electronic Banking 115
Traditional Banking (In-Person Deposits and Manual Check Writing) 115
Check Processing and Clearing Changes 117
Changes in Bank Deposits 120
ATMs 121
Online Banking 122
What Can You Do? 123
Electronic Banking: Considerations 132
CHAPTER 9 Payroll Processing 137
Payroll Administration: Adding/Changing/Terminating 138
Payroll Processing 142
Payroll Tax Returns 149
Payroll Processing: Considerations 151
CHAPTER 10 Inventory Issues and Controls 153
Prevention: Good News and Bad News 153
Retail Businesses: Items Available for Sale 153
All Businesses: Items for Use by Employees (Supplies, Tools, and Equipment) 166
Detection 166
Inventory Issues and Controls: Considerations 169
CHAPTER 11 Bank Statements, Canceled Checks, and Reconciliations 173
Bank Statements 177
Investment Account Statements 178
Canceled Checks 178
Bank Reconciliations 181
Bank Statements, Canceled Checks, and Reconciliations: Considerations 187
CHAPTER 12 Financial Reports 189
Generate Financial Reports Regularly 190
Why Is the Regular Review of Financial Reports So Important? 195
When to Consider Outside Advice and Assistance 196
Financial Reports: Considerations 202
CHAPTER 13 Safeguarding Your Bookkeeping or Accounting Systems 205
Manual Bookkeeping Systems 206
Computerized Bookkeeping and Accounting Systems 209
QuickBooks Users 222
Safeguarding Your Bookkeeping or Accounting Systems: Considerations 224
CHAPTER 14 Prevention, Detection, and Insurance 227
Timing Is Everything 229
Adequacy of Coverage 230
Responsibilities for a Claim 230
Disclaimer 235
Prevention, Detection, and Insurance: Considerations 236
CHAPTER 15 Your Response to an Identified or Potential Issue 239
A Dreaded Day of Discovery 239
Due Diligence on the Discovery 243
What If It Appears to Be Fraud? 246
Your Response to an Identified or Potential Issue: Considerations 249
Appendix A: Embezzlement Controls for Business Enterprises 253
Appendix B: Who Was Lester Amos Pratt? 291
About the Author 295
Index 297
