Undertake regular bank reconciliations

Undertaking regular bank reconciliations is a very useful fraud detection control. How regularly you undertake bank reconciliations should depend on the number of transactions made through the bank account on a daily basis and the value (in dollar terms) of funds flowing through the bank account. The higher the number and value of transactions, the more frequently bank reconciliations should be conducted (eg daily or weekly). Bank reconciliations should be done at least monthly for smaller organisations with few transactions in number and volume.

Any unusual transactions on the bank reconciliation should be investigated immediately. To hide fraud, a person conducting the bank reconciliations will need to ‘force’ the bank reconciliation to reconcile. To do this, one of the methods used is to create a ‘balancing item’ such as an outstanding deposit. However, that deposit remains as a reconciling item from one bank reconciliation to the next, growing in size as the value of the fraud increases over time.

To confirm that the bank account has been reconciled and actually does balance, the bank reconciliation as well as a copy of the last page of the bank statement should be included as part of the board pack provided for each board meeting.