Combat Fraud Through Month-End Close with SkyStem
- By Liz Briggson
- August 2nd, 2021
Occupational fraud is far more widespread than we may be inclined to think. According to the ACFE Report to the Nations, the typical fraud case lasts 14 months before detection, aggregating losses of over $100,000. A lack of internal controls contributes to nearly 33% of frauds.
Nancy Wu, Head of Sales and Customer Success with SkyStem, recently led a one-hour webinar discussing how to “Combat Fraud Through Month-End Close.” You might be surprised to learn how one of the more effective fraud prevention techniques is actually embedded within your existing month-end close activities.
To combat fraud, organizations often implement fraud awareness training and set up hotlines and email inboxes to gather tips. While these steps are beneficial, one important fraud prevention and detection strategy can be found right at the fingertips of the accounting team: Balance Sheet Account Reconciliations.
Consider your organization’s chart of accounts. Each account represents a certain type of activities. Each account also contains some level of risk of fraud which is what makes reviews, reconciliation, and variance analysis so important.
Did you know fraud detected through the performance of account reconciliations is usually detected within 7 months and damages are less than $100,000? That cuts the duration of the typical fraud in half! Detection through account reconciliations is timelier and more effective than management reviews and internal audits.
This knowledge should propel us to pay a little extra attention to account recs! What does a proper reconciliation entail?
- A reconciliation begins with the ending balance of the subject account
- The balance is compared to the relevant subledger or third-party supporting documentation
- Supporting ledgers and/or documents are examined to ensure transactions are appropriate
- Timing differences are documented
- The rec is signed by the preparer and reviewer
If you want to hear more and see these attributes in action, check out the webinar recording starting at the 36-minute mark.
P.S. Every account should have a designated reconciler to make sure nothing slips through the cracks. If an account is no longer used, go ahead and lock it down.
A May 2020 ACFE survey found that 93% of respondents expect fraud to increase in the wake of the Covid-19 pandemic. Remember this next time you perform or review an account rec. You can actively combat fraud just by going about your month-end close activities.
If you desire to tighten up your close, join us for SkyStem’s upcoming webinars, listed here.
Headquartered in the heart of New York City, SkyStem delivers a powerful month-end close solution for organizations seeking to streamline their financial processes. The company’s flagship solution, ART, is an enterprise technology that helps CFOs and Controllers shorten the month-end close and the time to issue financials by automating balance sheet reconciliations, managing month-end tasks, performing flux / P&L variance analysis and providing insightful reporting. The web-based solution streamlines and eliminates up to 90% of manual activities while strengthening internal controls and corporate governance.
Visit https://skystem.com/ to learn more.
- Fraud prevention
- month-end close
- balance sheet account reconciliations