As more and more people acquire computer equipment and skills, computer related fraud has become more prevalent. The most common instances of fraud involve the misuse of company cheques.
The simplest method to prevent cheque fraud is to simply keep your cheques locked up. If people donít have easy access to cheques then there will be fewer instances of cheques being issued to the wrong people.
Unfortunately the advent of sophisticated scanners and colour printers has allowed the criminal element to scan, alter and reprint cheques addressed to parties other than those to which they were originally issued. In theory the banks should be able to catch these cheques since they would not have the proper magnetic encoding, but they look so close to the originals that many banks assume that the magnetic encoding was damaged and clear the cheque anyways.
There are additional safety features that printers can build into your cheques, but these still require that the bank looks for them to make sure that they work.
For payroll cheques this can be overcome by going to direct deposit. This feature is offered by many payroll services and is available for our own Visual Payroll at a nominal cost. Instead of a physical cheque, an electronic direction is sent to the bank and monies are transferred into the accounts of the employees paid during the period.
To some extent this method can be used for vendor payments as well. We have developed a direct deposit interface for Accounts Payable Disbursements as well, based on our experience with Payroll Direct Deposit. In this case a payment notification is sent to the vendor to be confirmed by the bank.
†Many companies are not comfortable with the thought of transferring money directly into a vendorís account. In this case a cheque seems more natural but how do we secure it. Several banks are now instituting new programs to prevent cheque fraud.
One of these new programs is called Positive Payment Confirmation. In this case cheques are created and sent out as before but a transmission is sent to the bank listing the cheque numbers, amounts and payee names.
If a cheque comes through where any of those items has been altered it will be rejected. While there is a fee for this service, this would control most cases of fraud.
Another instance of fraud, which in many cases may be unintentional, is the reissue or alteration of an invoice as compared to an original quotation. Many companies accidentally reissue invoices and may also accidentally alter prices from those quoted.
If an invoice is reissued with the same invoice number this can be caught by Accounts Payable if the check for duplicate invoices feature is activated. In some cases however, the same invoice is reissued under a different number. In this case Accounts Payable would not detect the duplicate.
This makes a good case for the Purchasing Module. If orders are recorded and prices noted at the time of the order then these can be matched and verified as packing slips are received and invoices matched to orders and packing slips to catch any duplicates or pricing discrepancies from the original order.
Purchasing can also be used to compute the value of accruals for items received but not yet invoiced. For many companies this is often a manual time consuming operation.