Payments

Payments are usually made in one of three ways: cash, cheque or electronic payments. Each payment method has its own risks.

Cash Payments

When making cash payments (eg. out of petty cash) an invoice or receipt should be obtained for every payment made and the invoice / receipt needs to be confirmed to the cash amount paid. The person controlling the cash should not be the same person who reconciles the cash and the invoices / receipts, so any discrepancy can be adequately investigated. The fewer the cash payments needed the better.

Cheque Payments

The question is, is one signature enough? The answer is no. Not even if the cheque is for a small amount. Cheques need to be signed by two people. Also the following should also be undertaken:

• Cheques should never be pre-signed;
• When the cheque is prepared for signing, all documents supporting proof of the requirement for payment should be attached;
• The people who are signing the cheques need to thoroughly review the documents supporting the payment and sign the documents showing the appropriate approval;
• The amount and payee on the cheque needs to be the same as on the supporting documents and needs to be confirmed by the people signing the cheque.

Electronic Payments

The first thing people who are authorising electronic payments need to remember is that their password for signing in to authorise the payments is the equivalent of their signature on a cheque. A person would not allow a person to forge their signature, so why let a person use their password.

The following should be undertaken when making payments electronically:

• When the electronic payments are prepared for payment, all documents supporting proof of the requirement for payment should be thoroughly reviewed by the people authorising the payment;
• The amount, payee and bank account details on the electronic payment authorisation needs to be the same as on the supporting documents and needs to be confirmed by the people authorise payment.

It needs to be remembered that a common way for someone to commit fraud with electronic payments is for the person who sets up the payments puts in their own bank account number instead of a creditor’s bank account number. The people authorising payments need to be aware of this issue.