Thursday, May 1, 2014

Fraud Inappropriate segregation of duties in handling cash

Misappropriation of cash has become the common fraud revealed in the corporate community.

In November 2010, it is actually reported that Malaysian unit sufferred a loss of revenue of RM 1.5 million (about $622k) a result of the issuance of unauthorized check. It is not clear how this specific had took place.
cash fraud

Generally, one of the prospects a cash fraud might occur is when specific person forge the authorized signatories on the check. Through forging the authorized signatories, the person is able to direct the fund to his or her bank accounts. How could the internal controls of the Firm helps to prevent cash fraud then?

Possible remedies to aid Cash Fraud:
  • setting two authorized signatories necessity for the Company's check facilities
  • presence of proper segregation of duties among check book-keeper, preparer of check, review of check amount, approver of check
  • cash book review be achieved by suitable senior finance personnel
  • evaluate the cash movement by bank account every month
The presence of above controls  procedures may help mitigate the potential risk of cash fraud.

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