Home > Accounting & Bookkeeping, Business Consulting > Do you know where your cash is?

Do you know where your cash is?

It seems that every other week, there is some company in the news who discovered that one of their employees was stealing money.   Whether from using company credit cards personally, forging checks, or siphoning funds in other ways, companies are reporting huge losses due to fraud.  A study by the Association of Certified Fraud Examiners highlighted in their 2010 “Report to the Nations” that the median loss due to these types of fraud was $160 thousand dollars with a quarter of reported cases losing more than a million dollars.  They included that the potential loss due to fraud on a global level was more than $2.9 trillion dollars. Even when the theft is made in small amounts, these small amounts grow over the years and can be the cause of a company’s downfall. When the theft is discovered, the chance of ever recovering the full amount stolen is slim to none. 

 As a business owner, do you know where your cash is?

The basic principle to preventing fraud in your company comes from the Fraud Triangle. 


The Fraud Triangle, first coined by criminologist Donald R. Cressey, describes three factors that are present in every example of fraud.  A business owner has no control of an employee’s ability to rationalize fraud, or the financial pressure/ motivation that an employee faces.  What a business owner can control is opportunity.  Having a good system of checks and balances can be a good way to prevent opportunity.  Also restricted access to financial information could be a good way to prevent opportunity.  Most software programs have the ability to restrict certain users from sensitive information or tasks.  It is important for business owners to take advantage of these capabilities.  Lastly, it is very important to review your financial statements on a regular basis, and to compare them with prior periods.  This will make it easy to spot trends and inconsistencies that can be researched for accuracy. 

It can be easy for business owners, with limited time and funds to overlook these internal controls. However, it is important to be proactive in fighting fraud so your business can live to see another day.

Comments ( 0 )
  1. No comments yet.
Comments are currently closed.
Trackbacks & Pingbacks ( 0 )
  1. No trackbacks yet.
  2. Trackbacks are currently closed.