Sunday, November 22, 2009

Cheque Fraud

Cheque fraud can easily occur and can cost an organisation significant amounts if appropriate controls are not in place.

Cheque fraud can occur in a number of ways:
  • Using false invoices to have a cheque paid in favour of the false business;
  • Changing a legitimate cheque (payee and amount) without having authority to do so;
  • The theft of cheques and the use of those cheques at a later time;
  • Duplication of cheques, especially if they are preprinted by the company;
  • Depositing a cheque into another account without authority.

To prevent cheque fraud, there are a number of possible controls:

  • Reconcile the bank account on a regular basis;
  • Never sign blank cheques. Only sign cheques when details have been completed and there is documentation supporting the payment;
  • Limit the number of signatories on the account and remove signatories when they are no longer required;
  • Ensure that cheques require at least two signatories;
  • Keep all cheques in a safe place to deter theft;
  • Avoid the use of acronyms when completing the Payee;
  • If you are expecting more cheques and they have not arrived, contact the bank and cancel them.

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