The recent announcement that a Queensland property developer was imprisoned for 3 years for forging cheques (ASIC press release 09-89AD) is a timely reminder that all companies should review their cheque handling processes.

So what are some simple actions that you can take to ensure that you don’t have the same problem?

1. Check who the current cheque signatories are for each bank account in the business. Are these signatories up to date and appropriate given the current duties of each signatory? Do appropriate segregation of duties exist between the key people in the cheque payment process?

2. Are the cheques held in a secure place before they are mailed out?

3. Are bank reconciliations conducted regularly and differences isolated and reviewed. In many frauds we have investigated, a significant portion of frauds would have been detected earlier and the losses minimised if the bank reconciliations were properly conducted. In small to medium sized companies, we recommend that the Managing Director review the bank reconciliation on a monthly basis to ensure that this key process is done and there are no unreconciled differences.

Whilst the above controls are simple things that can be done immediately checked, the cheque payment process is just one of many processes where money can leak out of your business.

Over the coming weeks we will look at some other key areas to look out for.