Freeman & Davis LLP, Certified Public Accountants. New York. Accounting, financial planning, domestic and international tax services.

Phone:
(212) 594.8155
Fax:
(212) 465.0520

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SPECIAL REPORT

At Freeman & Davis LLP,
we believe in keeping our clients informed

BANK STATEMENTS, FRAUD AND
THE BUSINESSMAN

If you are a small or medium size business owner who does not have a fully operational internal accounting control system, you might be exposing your business assets to great risk of loss. Many businesses, due to limited size and available administrative personnel cannot create adequate protection systems. Consequently, unintended control of business assets such as cash and accounts receivable is sometimes placed in the hands of employees who are not the business owners.

Potentially, one of the most serious Internal accounting system weaknesses for businessmen is the absence of control over bank accounts, including the issuance of checks and the making of deposits. A number of oversight procedures must be set in place by the business owner. One of the most important is to control the receipt of the monthly bank statements.

The potential for bank account fraud is high. The possibilities of manipulation of your bank statements, checks and deposits is great and can be done by unscrupulous individuals, manually and through electronic resources. We urge you to adopt internal procedures to reduce, prevent and discover the possibility of loss.

The business owner must be responsible for carrying out the following steps:

Obtains the unopened bank statement directly from the personnel responsible for receiving and distributing company mail.
Open the bank's envelope and read the bank statement
Review the cancelled checks. Look at signatures, payees, endorsements and amounts. Check out any unusual-looking cleared checks.
Watch the changes in your cash balances during the month and see if they correspond with the nature of business activities.
Survey the bank deposit credits. Look for possible discrepancies.
After you are satisfied with the contents of the bank's monthly statement, turn them over to your bookkeeper or accounting department for immediate preparation of bank reconciliations.
Each month read and review all of the company's bank reconciliations prepared by your personnel.
Have a daily cash report prepared for you by your bookkeeper or controller.

If you have any questions on this matter or seek assistance on how to improve your cash control systems, please call us.

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Please contact us:
Freeman & Davis LLP
14 Penn Plaza
(225 West 34th Street)
New York, NY 10122-0397

Tel: 212 594-8155
Fax: 212 465-0520
email: info@freemandavis.com

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