Depending on the companies' organizational structure, there are different types of employees with an opportunity to steal cash. In a merchandising company and other businesses with over the counter type of sales set up that mainly deals in cash sales, the cashier has an opportunity to steal cash by not recording every cash transaction into the computer points of sales. Besides, procurement managers can steal through including fictitious entries in the purchase orders in cooperation with the suppliers, especially for smaller items that are purchased through petty cash. It is also possible for procurement managers to stamp and pass to finance office invoices for supplies not made by falsifying receipt and state of goods stamps on the invoices.
The senior managers who are entitled to reimbursements from the petty cash can through the use of falsified receipts claim refunds for expenses used on personal trips or false receipts ( Pamungkas et al., 2018) . The sales department staff are the contact between organizations and the clients, make a follow-up on account receivables, and take the cash on behalf of the company without remitting it to the cash office and waiting for the account to be inactive and cleared as a bad debt. The staff who form the procurement committees inflate tender amounts or collude with contractors to have kickbacks included in the tender price, which is after that given to them in cash.
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Ways in which staff steal cash
There are several ways through which money gets stolen from a company, including the creation of a discrepancy in accounts. The accountants primarily cause differences in reports. Discrepancies in accounts include a mismatch in the QuickBooks figure verses the figure recorded in invoices and receipts. The accountants can decide to collude with the company suppliers and write them more money to check against what was supplied. The supplier then, in turn, gives back some money to the accountant for appreciation.
The accountant and other junior employees can also engage in fraudulent activities, including invoicing fraud, checking to tamper, and overbilling the customer. Check tampering scheme involved altering or forging unauthorized checks. Check tampering happens when a worker changes, steals, or forge a check payable from the employer bank account/ business account. This occurs when the accountants are given easy access to a blank check and a business checking account, making it easy for employees to commit fraud. Overbilling is part of this case because the employee wrote invoices to charge higher prices than it showed in the actual job invoices and receipts. Another way of asset misappropriation includes theft of services for companies offering services; the employees enjoy such services without pay. For example, in a mechanic shop, employees can have their car oil changed without paying or stealing inventory items either physically or having them diverted during delivery, which is then included in the delivery notes and checked as received. Besides, payroll fraud is used to steal cash through the inclusion of ghost employees whose payment is diverted to personal accounts of staff in the human resource department.
Procedures for preventing theft
There are a variety of procedures that can be instituted to prevent theft of cash or company property. Frauds falling asset misappropriation can be prevented through conducting regular background checks on the key staff in the finance and procurement staff and new employees ( Pamungkas, Ghozali, & Achmad, 2018) . In the key departments that handle company assets, there should be a separation of duties such that the staff who receives cash payments is different from the one who keys the receipt in the accounting system. Rotation of duties by the accountants in the finance office is a significant step towards preventing accounting fraud and should be done at least once per month. Conducting impromptu checks on accounts receivables and payables could help unearth possible loopholes used to steal cash. Besides, the staff handling accounts receivables and payables should be rotated regularly. In cases of huge balances, an external consultant should be engaged to check on the authenticity of such balances and recommend ways of tightening controls. Also, key finance staff should have mandatory leave days at least once a year as a deterrent to commitment of fraud. A strict code of ethics should be put in place to control bribery and corruption, and staff must abide by it with stringent disciplinary measures for breaching it. The company should also conduct due diligence on key suppliers and other third parties who regularly transact with the company. A reward scheme to appreciate ethical behavior, and reporting of unethical practice in the company should be established.
Sarbanes Oxley (SOX) is an act created back in 2002 to help deal with the corporate accountability issues as a response to the high levels of financial frauds and scandals experienced during this period. The Act applies to public companies. It aims to ensure an entity maintains an effective internal control system that safeguards the preparation of financial statements by detecting and eliminating chances of fraud. Thus, the financial statements reported represent the accurate and fair view of a company's status within the reporting period.
References
Pamungkas, I. D., Ghozali, I., Achmad, T., Khaddafi, M., & Hidayah, R. (2018). Corporate
governance mechanisms in preventing accounting fraud: A study of fraud pentagon model. Journal of Applied Economic Sciences Quarterly , 8 (2), 549-560.
Pamungkas, I. D., Ghozali, I., & Achmad, T. (2018). A pilot study of corporate governance
and accounting fraud: The fraud diamond model. Journal of Business and Retail Management Research , 12 (2).
