I often hear complaints about banks, but last month was quite an eye-opener on the aspects of banking-related fraud. Traditionally, the law has placed banks in the position of being strictly responsible for ensuring that cheques are correctly signed.
    Electronic banking has changed all this and banks are often asking their customers to sign a “blanket” indemnity. People seem to sign these documents in blissful ignorance, trusting their bank, not realising that by doing so they may be letting the bank “off the hook”.
    The electronic bulk payments system makes no provision for individual signature for individual payment. The trusting businessman approves a list of payments and his book-keeper does the rest.
    But, just suppose your book-keeper suddenly has a financial crisis, or just gets greedy, and decides that a little “loan” would help.
    So easy to alter a figure, or just make a “mistake” and pay a higher salary to himself, than his actual entitlement. The horror story continues and 12 months later a vigilant young auditor spots what is going on, by then heaven knows how much has been stolen. You are vulnerable! Here are some checks:

1. Seriously consider if you really need to make your payments in this manner. Cheque-signing can at least give you some “come back” on the bank and makes you carry out security checks.
2. If you use electronic banking, ensure that an independent person in authority checks the input.
3. Make sure that the bank account is regularly and independently checked.
4. Independently compare salary payments to personal records regularly and for each member of staff.
5. Make sure that the book-keeper takes regular holidays and work is double-checked in his absence.
6. Involve your auditors/accountants. Are they aware of these risks? If not get rid of them!
7. Ask your accountant for a systems check and to advise you on the best ways of avoiding fraud.