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Have you exposed your business to fraud by neglecting these three creditor controls?

by , 05 November 2013
Picture it: The accountant you've trusted for the last few years is stealing from you. He's been changing existing creditor banking details to his own, and has pocketed the cash himself. It sounds too gruesome to be true, but it happens... Unless you've implemented the controls that prevent this kind of fraud.

You only need to look at the news headlines to see how rampant business fraud is in SA.

Luckily, you can protect your company by making a few adjustments to how you control your company's creditors. Adjustment like including these following creditor controls in your company's best practice regulations. 

Three creditor controls essential for keeping your business fraud-proof
i. Management level
It's all about authorisation. Management should be the only party who's authorised to change the banking details of suppliers or to add new creditors.

Ideally, management must receive a written request from the new creditor (or the supplier who's changing his banking details), with a letter from the bank or a cancelled cheque to support the new bank account details.

ii. Staff level
Staff must ensure they receive sufficient supporting information from creditors, before they present any changes to management for authorisation. Create a standardised form for staff,making it easier for them to collect all the required information upfront.
Staff must also file the documents together once they've been processed, so that any errors can be tracked back. To pick up errors early, make sure that the person who does the filing is not the same person who does the rest of the recording – fresh eyes are more likely to spot inconsistencies.

The principle is similar to that of changes to employee banking details.

iii. System level
Print off a report every month, listing all changes to creditors' banking details. Management must inspect this, and follow up on any changes that weren't authorised.

With these controls in place, you can rest assured that your business is safe from fraud!

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