Misappropriation of cash is one of the common fraud reported in the corporate world.
In Nov 2010, it is reported that Malaysian unit sufferred a loss of RM 1.5million (approximately S$622k) due to the issuance of unauthorised cheque. It's not clear how this had occurred.
In general, one of the possibilities a cash fraud could occur is when certain individual forge the authorised signatories on the cheque. By forging the authorized signatories, the individual is able to direct the fund to his / her bank accounts. How can the internal controls of the Company helps to minimize the risk of cash fraud then?
Possible solutions are:
- to set dual authorized signatories requirement for the Company's cheque facilities
- existence of proper segregation of duties between cheque book-keeper, preparer of cheque, review of cheque amount, approver of cheque
- cash book review be performed by appropriate senior finance personnel
- review the cash movement by bank account on a monthly basis
The existence of above controls and/or procedures can help to mitigate the risk of cash fraud.
Wednesday, February 8, 2012
Tuesday, February 7, 2012
Fraud- fictitious employee been created
One of the common fraud we have encountered / read on the news relates to payroll fraud, where fictitious employees were been created by individual to earn additional salaries on the fictitious employees been recorded.
One of the famous cases occurred in Singapore Airlines, whereby fictitious employees' hours were clocked in by payroll officer. Payroll officer pocketed the money successfully by entering the bank account details into the system to earn the extra hours clocked.
To minimize the risk of fraud arising from fictitious employees been created. There should be proper segregation of duties between:
a) personnel who have the access right to payroll system to create and employee
b) personnel who have the access right to enter bank acccount details of individual employee into the system
c) a reviewer ( who should not been entitled the right to edit, but been entitled the right to view) to ensure that the bank account details is input correctly
d) a reviewer who review the monthly payroll costs ( by department, by employee name); this reviewr should do a random testing to tally the summary of payroll cost details to timesheet submitted / revised letter of incremenet
The segregation of duties mitigate the risk that a fictitious employee can be created by individual.
One of the famous cases occurred in Singapore Airlines, whereby fictitious employees' hours were clocked in by payroll officer. Payroll officer pocketed the money successfully by entering the bank account details into the system to earn the extra hours clocked.
To minimize the risk of fraud arising from fictitious employees been created. There should be proper segregation of duties between:
a) personnel who have the access right to payroll system to create and employee
b) personnel who have the access right to enter bank acccount details of individual employee into the system
c) a reviewer ( who should not been entitled the right to edit, but been entitled the right to view) to ensure that the bank account details is input correctly
d) a reviewer who review the monthly payroll costs ( by department, by employee name); this reviewr should do a random testing to tally the summary of payroll cost details to timesheet submitted / revised letter of incremenet
The segregation of duties mitigate the risk that a fictitious employee can be created by individual.
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