Use E-Payment to Mitigate Fraud – March 2014

The following addresses an topic regarding internal controls. Any company, large or small, needs robust internal controls to prevent, detect, and respond to fraud.  While progress on fraud prevention and detection is evident on some fronts, many organizations need to improve their procedures to protect themselves against damage from fraud.

One of the most common fraud mitigation strategies has been the implementation of e-payment methods.  Increased of electronic payment methods has coincided with a drop in payments fraud according to the Association for Finance Professionals.  Good news obviously, but organization must remain vigilant since fraudsters are constantly refining their tactics and abilities.  Common defenses against attacks on security include daily reconciliations, strengthening internal procedures such as separation of cash handling and recordkeeping functions, and up to date disaster recovery plans.

The major challenge facing many organizations is understanding how they store and hold data.  Constant review of these procedures and policies is considered to be a most effective means of fraud prevention.  In addition to basic internal controls such as separation of functions, key areas of such policies and procedures include evidence handling and interviewing skills when investigating employees suspected of fraud.

An excellent source of strategies on detecting, preventing, responding to, and deterring fraud is a report compiled by CGMA, called “Fraud Risk Management:  A Guide to Good Practice.”

Additional information can be obtained by accessing the following link:

http://www.journalofaccountancy.com/Issues/2013/Jun/20137650.htm

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