Fraud Prevention Tip #21: Four Daily Behaviors at the “Anti-Fraud Moment”

Supervisor Mike said, “Just cut to the chase. What exactly should I be doing every day to deter fraud on my watch?”

OK – here you go Mike. This is as simple as it gets.

Fraud is deterred at what I call “The Anti-Fraud Moment”. This moment occurs every time you have a pen in your hand and a document in front of you to approve.

Example documents include:

• Employee time sheets
• Supplier invoices
• Out of pocket travel expense reports
• Journal entries
• Bank reconciliations
• Contractor monthly payment applications
• Purchasing card transaction receipts
• Month end budget to actual operating or cost reports
• Point of sale cash register overrides
• Inspection reports
• Exception and variance reports
• Inventory control reports
• A new lease
• Joint venture agreements
• Loan documents

The actual list of documents that the typical employee, manager or executive signs each day is enormous. But they all have one thing in common. The act of physical approval is the true choke point in any fraud deterrence, prevention and quick detection effort.

So if this common activity is the moment of attention, then what is the ‘cut to the chase’ activity we want from approvers?

Four words: Look, Ask, Doubt, and Resolve.

1. LOOK. Actively scan the document and related support for what doesn’t look or feel right to the approver. Managers and staff who review and approve any document day in and out are in the best position to know when something strange, odd or curious is presented for their signature.

2. ASK. Consciously ask yourself “HDIK?” – How Do I Know that this document right here in front of me right now is correct? Not the time sheet or invoice I approved yesterday or last week. This one I’m about to put my signature and reputation on right now. On what basis do I know this time sheet is correct?

3. DOUBT. When in doubt, doubt. Not when in doubt, believe! Doubters see something that catches their attention and choose to double check details before signing. Just in case. Believers see something strange and just say, “It’s probably OK” and sign without checking.

4. RESOLVE. If you have looked, asked HDIK, and checked details when it doesn’t look right to you, the last step is to positively resolve your suspicions one way or the other – or refer the issue to those with the background and authority to investigate.

Four simple active steps at the moment of approval. Look, ask, doubt and resolve. If you can get everyone to do those four things, fraud deterrence, prevention, and quick detection is a snap.

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”