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.