4 Tips for Stopping Fraud with QuickBooks

to-do-list----or-not-134048-mEvery company owner knows the importance of having strong internal controls to prevent and/or detect customer or employee fraud. A weak system will more than likely run into a fraud within the company which can result in a significant loss in revenue for the company. For this reason, taking extra precautions and being diligent about internal controls is essential when you own a business.

Internal Controls

You need to protect yourself by staying on top of the transactions within your company on an ongoing and consistent basis. By taking these few precautions using Quickbooks to establish internal controls, you can save your business from fraudulence and a loss of profit. Since you work very hard to build upon and manage your business, it’s best that you take all possible measures to protect it from scams.

Bank Reconciliations

Bank reconciliations should be performed on a regular basis, one for each credit card and bank account. This should be done once a month for smaller businesses and daily for larger companies with high transactional volumes.

  • Online banking is a good source for keeping track of daily, high-volume transactions.
  • For security purposes, do not allow employees who enter bills, to collect payments, record deposits, perform credit card transactions or print checks to do bank reconciliations.
  • Make sure that the vendor names and amounts on the banking register match those on the bank statements or on returned check copies. Only the owner should perform this task.
  • Use the Previous Discrepancy report to make notes on which of the transactions were deleted or changed since the last reconciliation, and why?
  • Make sure to check outstanding transactions, old checks and deposits that have not cleared for legitimacy.

Accounts Payable

Start the payables process using purchase orders for the approval of an expense. When the bill arrives, it can be matched up to the original purchase order and then paid.

  • Checks and payments to vendors should be approved by a manager using the Quickbooks Unpaid Bills Detail Report
  • Do not allow employees who enter purchase orders or receive items, or enter bills to be in charge of the Pay Bills/Print Checks functions
  • Use QuickBooks reports to find missing check numbers which account for discrepancies,
  • Find all voided or deleted transactions to verify why they were voided or deleted.

Accounts Receivable

Check customer balances and outstanding invoices (including an audit of every employee involved in those sales and collections process) at least once a month.

  • Send out customer statements monthly
  • Have collections personnel keep notes on collection efforts. Do not allow employees that create invoices, enter customer payments, and that record deposits, to be involved with collections duties
  • Verify that a sale truly occurred by the subsequent customer payment. That way, if collection calls are not made and a payment is not received, there will no verification of the sale.


Count physical inventory intermittently comparing the QuickBooks reports to the account for detection of any discrepancies. Ideally, this should be done by employees who do not handle merchandise regularly.

Not Just Quickbooks

A large number of small to mid-sized businesses are functioning with weak or minimal internal controls. It would be ideal if you could all trust our customers and employees impeccably and not have to worry about fraud and dishonesty in the workplace. However, the truth is that where the internal controls are lacking or insufficient, the probability of fraudulent activities taking place is relatively high. It is unfortunate but inevitable. For this reason, in order to protect your company revenue, you need to implement proper controls.

Using the Quickbooks Accounting System is a good start, but additional procedures for adequate checks and balances are necessary too. A strong system of internal controls can give any business owner peace of mind and protect their company’s revenue.

Bernard Roesch About Bernard Roesch

Bernard Roesch is co-founder and Managing Partner of Mission Consulting. Bernard’s background in the early years of his career was spent in the manufacturing sector, making his QuickBooks perspective a unique one – he understands the intricacies of a complex environment and then applies his strategic skills accordingly.