Protecting your cheques is important as letting others have access to them exposes you to the risk of fraud.
Here are some basic precautions -
1. Do not pre-sign cheques. If this is unavoidable, only sign a few and place them into the hands of one person who wil be monitored by another.
2. Set withdrawal limits on each cheque so that any forger will have to sign several in order to steal a large amount.
3. Monitor how many cheque books the bank has issued to your company. This is to ensure that employees do not make requests for such without your knowledge, or intercept them when the cheque books are sent to you.
4. Do bank reconciliation statements every month as they will warn employees that any dishonesty will be quickly caught. Some cases of forged cheques involved dishonesty over a long period of time.
5. Something unusual - ask every employee's spouse to sign an indemnity - he/she will be responsible for any fraud caused by the spouse. Depending on how badly employee wants the job, this may be difficult to achieve.
Showing posts with label fraud precautions. Show all posts
Showing posts with label fraud precautions. Show all posts
Wednesday, October 7, 2009
Thursday, July 16, 2009
Preventing employee fraud
Many cases of fraud involve insiders like employees who steal money or forge cheques.
How to prevent this? Overseas, it is common for employees in sensitive positions to be covered by fidelity bonds. These are in fact of form of insurance to cover losses from employee fraud. I understand that this is not common in Singapore. The Law Society has professional indemnity insurance which protects law firms against negligence suits and fraud by employees but in the past, it did not cover fraud by the partners of the law firm. Not sure about the situation now.
So what should you do as HR manager? One possiblity, which is also quite novel, is to require a potential employee to obtain a guarantor who is a close friend or relative. This guarantor will promise to be liable for losses caused by the employee's dishonesty. This measure will face some resistance from employees. Also, whether the guarantee works in the end depends on many factors, including the guarantor's financial capability at the time of the claim.
How to prevent this? Overseas, it is common for employees in sensitive positions to be covered by fidelity bonds. These are in fact of form of insurance to cover losses from employee fraud. I understand that this is not common in Singapore. The Law Society has professional indemnity insurance which protects law firms against negligence suits and fraud by employees but in the past, it did not cover fraud by the partners of the law firm. Not sure about the situation now.
So what should you do as HR manager? One possiblity, which is also quite novel, is to require a potential employee to obtain a guarantor who is a close friend or relative. This guarantor will promise to be liable for losses caused by the employee's dishonesty. This measure will face some resistance from employees. Also, whether the guarantee works in the end depends on many factors, including the guarantor's financial capability at the time of the claim.
Accountant jailed for embezzlement
Accountant Lim Seow Kok was jailed for 5 1/2 years for embezzlement of over $500,000. He admitted to 74 counts of forgery and criminal breach of trust.
He worked at 11 different organisations (including charities such as Hougang Care Centre) between 2007 and 2009. His method was to join the company for a while, forge cheques to withdraw his employer's monies and then to disappear.
It is unclear whether or not any employer could have stopped him before he took their money. Human Resources departments should, before hiring someone, check his employment history. If the person claims to have had no employment, perhaps a check of his CPF statements will confirm this. To preserve the employee's privacy, the non-essential parts of the statement can be covered up before the statement is shown to the company.
Organisations should also take good care of their cheque books. Although it could be argued that forged cheques are invalid and the banks should bear the loss, avoiding the costs and uncertainty of legal disputes is far preferable.
He worked at 11 different organisations (including charities such as Hougang Care Centre) between 2007 and 2009. His method was to join the company for a while, forge cheques to withdraw his employer's monies and then to disappear.
It is unclear whether or not any employer could have stopped him before he took their money. Human Resources departments should, before hiring someone, check his employment history. If the person claims to have had no employment, perhaps a check of his CPF statements will confirm this. To preserve the employee's privacy, the non-essential parts of the statement can be covered up before the statement is shown to the company.
Organisations should also take good care of their cheque books. Although it could be argued that forged cheques are invalid and the banks should bear the loss, avoiding the costs and uncertainty of legal disputes is far preferable.
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