Different Types of Accounting Frauds and Prevention Tips

A little control or access to the accounts and assets can tempt anyone but the trained and professional workers to commit the fraud. Accounting-related frauds are still quite common even in the developed countries. In more than often cases, the internal employees of the organization are found involved in the incident.

Account payable fraud accounts receivable fraud, and payroll fraud is some of the most common types of accounting frauds any organization can fall prey to. In addition to it, identifying these frauds becomes complicated if they are committed by the employees of the accounting department.

Keeping a sharp eye on the employees is the solution, which may not be possible all the time. Therefore, you need to employ loyal, responsible, and professional workers to combat the issue. You can hire a trained and skilled professional from the bookkeeping and accounting firms in Dubai and let them take care of your accounts while staying responsible and vigilant. Do not fall prey to frauds and hand over the responsibility only to the best ones in the field.

What is Accounting Fraud?

Intentional manipulation, misrepresentation, and alteration of the financial statements, records, or accounts-related documents is called accounting fraud.

Common Types of Accounting Fraud:

Here are some of the most common types of accounting frauds every organization should watch out for:

• Embezzlement
• Accounts Payable Fraud
• Fake Supplier
• Personal Purchases
• Double-Check Fraud
• Accounts Receivable Fraud
• Payroll Fraud
• Corruption

Top 6 Types of Account Payable Frauds

Manipulating and creating deceptions in the payable accounts of any business or non-business organization is called accounts payable fraud. Some of the common types of account payable fraud include:

1. Billing Schemes
2. Check Fraud
3. Expense Reimbursement Fraud
4. Kickback Schemes
5. Conflicts of Interest
6. Automated Clearing House Fraud

Quick Prevention Tips:

Here are the quick prevention tips you can implement to stop account payable frauds:

• Verify Vendors
• Reconcile Accounts
• Review Transactions
• Implement a Check Review Procedure
• Conduct Unscheduled Audits
• Rotate Employees Function
• Implement Mandatory Vacations
• Match Employee and Vendor Addresses

Top 6 Types of Accounts Receivable Frauds

Altering or manipulating the receivable accounts of the organization falls is termed as accounts receivable frauds. Some of the common types of accounts receivable frauds include:

1. Lapping Fraud
2. Skimming Fraud
3. Check Skimming
4. Fraudulent Write-Offs
5. Fictitious Sales
6. Fictitious Accounts

Quick Prevention Tips:

Here are some quick prevention tips that can help you control accounts receivable frauds:

• Identify Company Weaknesses
• Segregate Duties
• Be Alert
• Enforce Controls
• Adopt Careful Hiring Practices
• Watch Behavioral Red Flags
• Get Insurance
• Embrace Education and Training

Top 6 Types of Payroll Fraud

Embezzling or manipulating the payroll record of the organization in any way is termed payroll fraud. The following are some of the most prevalent types of payroll fraud:

1. Ghost Employee Schemes
2. Advance Fraud
3. Timesheet Fraud
4. Buddy Punching
5. Paycheck Theft
6. Pay Rate Alteration

Quick Prevention Tips:

To prevent and control payroll frauds, you can easily follow these quick prevention tips:

• Reconcile Balance Sheets
• Reconcile Payroll Accounts
• Make Managers Approve Timesheets
• Make Supervisors Approve Overtime Claims
• Perform Data Analytics on Payroll Records
• Check Payroll Records of Terminated Employees
• Separate Payroll Checks Preparation and Reconciling Payroll Account
• Implement Mandatory Vacations

Take Away!

Employees of the organization, and the outsiders, can commit accounting fraud. Relying on trained and professional bookkeepers and accountants is the best way to control and prevent such incidents.