Small Business Crime: Bookkeepers Saving Employers From Fraud

American’s small businesses create 90% of all new jobs, but are 100 times more likely to be the victim of fraud, says Steve Sahlein, co-president of the American Institute of Professional Bookkeepers (http://www.AIPB.org). Many small firms are simply swept under by what has become an annual $50 billion in check fraud and $1 billion in credit card fraud. “Small businesses don’t have the Security Department enjoyed by large corporations, so if the bookkeeper doesn’t spot the fraud, the business takes a hit,” Sahlein says.

The following tips on avoiding check and credit-card fraud are from the training course AIPB, the national association and certifying body for bookkeepers, offers its 30,000 members.

To avoid check fraud, train employees to look for:

• Any check without at least one perforated edge.

• Signs of alterations or erasures, especially in the signature or numerical and written amounts.

• The absence of a background design on the check.

• The absence of either a bank logo or bank name in the regular lettering.

• The absence of the bank address.

• A glossy, crayonish appearance or any lack of detail or sharpness (indicates counterfeiting).

• A rough texture (indicates possible erasures).

• Faded colors (may indicate chemical bleaching).

• Routing numbers (at the bottom of a check in computer-style type) in proper dull, nonreflective magnetic ink.

Tell employees not to accept a Visa or MasterCard unless:

• the numbers on the signature panel slant left and match the numbers on the front of the card; and

• embossed account numbers on a Visa card begin with a 4 and is 13 or 16 digits — on a MasterCard begin with a 5 and is 16 digits.

Do not accept an American Express card unless:

• the account number begins with 34 or 37 and is 15 digits;

• the account number on the front and back match; and

• the signature panel has wavy black lines and is not plain white or smudged (altered card).

Among the bookkeepers who have taken AIPB’s training in fraud preventions is Tracy Armstrong, Armstrong Bookkeeping, Whitefish, Montana.

“A client was seeing a fair amount of theft of its inventory,” Armstrong says. “Based on AIPB’s training in fraud prevention, I realized that the same employee should not be both signing for new inventory and then doing physical counts of the inventory on the shelves. I discussed this with the owner. He then assigned one employee to sign for inventory and another to do the physical counts and there was much, much less theft.”

Armstrong says her training in credit card fraud has also helped her clients.

“We see fraud training for bookkeepers as preventive health,” Sahlein says. “If they don’t see their company’s chest pains and shortness of breath – - and take the proper action — the consequences may be fatal.”