How to Prevent Cheque Fraud

Cheques are commonly used in personal finance and throughout companies to transact business, but fraud is an ever-present risk in the financial system. Preventing cheque fraud requires planning, vigilance and internal controls within organizations. The following steps help prevent fraudsters from leveraging cheques for nefarious purposes.

Segregation of Duties

Of critical importance is the segregation of the recordkeeping, custody of assets and authorization of transactions in businesses. This standard internal control framework is especially relevant to cheques and cheque signers. For example, bookkeepers should not store cheques and have the ability to authorize cheque payments, because it presents an opportunity for rogue behavior. Accounting departments, even in small companies, should have ways to protect the authorization of transactions in a manner that keeps everyone honest.

Sequential cheques

Secure storage and tracking of cheques is critical for mitigating fraud risk. Only authorized personnel should have access to cheques, or the ability to order cheques, when current supplies dissipate. Sequential cheques are used to aid in the tracking and identification of unusual or suspicious transactions. For instance, if a cheque is cashed that is a duplicate and is associated with a prior year batch of cheques, it becomes easier to spot the anomaly and further investigate the disparity.

Bank Reconciliations

On a personal or corporate level, bank reconciliations provide an effective means to catch disparities between accounting records and bank statements. Fraudulent cheques are identified more quickly, when a trained eye is watching the activity in the bank. Too many companies neglect to reconcile accounts effectively, providing fraudsters with the opportunity to cash fraudulent cheques or perpetrate unauthorized transactions. Working with a qualified accountant to reconcile bank statements is key for mitigating risks.

Sourcing Quality cheques

Ordering bank quality cheques is an effective means to thwart criminals, because it makes it more difficult for cheques to be forged, manipulated or duplicated. Materials and printing techniques are critical in deterring thieves from even attempting to cheat the system.Low cost bank quality cheques make it easier for organizations to protect themselves, while minimizing the overhead needed to run a business. The loss of money attributable to poor quality cheques is too high a risk to tolerate.

Document Retention

Storing accounting records in a secure location protects bank account numbers, canceled cheques and other sensitive information. Keeping records such as these away from potential fraudsters is of paramount importance. The fewer tools criminals have at their disposal to commit cheque fraud, the better for businesses.

ASAP Cheques

Cheque fraud is personally, financially and professionally detrimental, but with careful precaution and sourcing of cheques, companies can mitigate risk. Look for bank quality cheques without bank prices, to save money and improve banking transactions. To learn more, you can find all of our resources on Cheque Fraud Prevention.