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Policies and Procedures to Prevent Fraud and Embezzlement: Guidance, Internal Controls, and Investigation



Policies and Procedures to Prevent Fraud and Embezzlement: Guidance, Internal Controls, and Investigation

Edward J. McMillan

ISBN: 978-0-471-93290-1 July 2006 256 Pages



It's not a secret that corporate fraud and scandal are real threats to business today, from which no business, large or small, is immune. Fraud losses are devastating-but they are also highly avoidable. Policies & Procedures to Prevent Fraud and Embezzlement shows you how to proactively safeguard your business's assets and reputation from countless plots, schemes, and even identity theft.

This invaluable tool prepares auditing CPAs, internal auditors, fraud investigators, and managers to:

  • Thoroughly evaluate their organization's system of internal controls
  • Assemble a fraud examination team
  • Document a fraud action plan
  • Expose weaknesses that could lead to fraud
  • Take corrective action to reduce the possibility of victimization

Embezzlement and fraud are realities that all organizations must confront, with the growing list of collapsed corporate giants serving as evidence of the destruction caused by financial abuses. Policies & Procedures to Prevent Fraud and Embezzlement offers provocative new strategies to deal with this ongoing dilemma and serves as a road map to reduce financial dishonesty in the workplace.

About the Author.




About the Companion Website.

Section 1 Embezzlement: Who Does It and When.

The Perpetrators: Who They Are, Why They Do It, and How They Are Caught.

The Embezzler’s “Window of Opportunity”.

Section 2 Statement of Auditing Standard No. 99 “Consideration of Fraud in a Financial Statement Audit”.

Statement of Auditing Standard No. 99 “Consideration of Fraud in a Financial Statement Audit”.

Section 3 Essential Internal Control and Administrative Procedures to Avoid Embezzlement.

The Background Check.

Conditions of Employment Agreement.

Conflicts of Interest.



Noncompete Agreements.

Confidentiality of Information.

Bonding Issues.

Signers on Bank Accounts.

Two-Signature Checks.


Positive Pay.

Deposit Security and Restrictive Endorsements.

Check Stock.

Cash Transactions.

Cash Register Issues.

Insurance Committees.

Computer File Backups.

Check and Wire Transfer Signatures.

Inventory Issues.

Company Credit Cards.

Lines of Credit.

Bad Debt Policy.

Internal Audits.

Stop Payment Orders.

Voiding Checks.

Numbered Check Request Forms.

Expense Accounts.

CPA Management Letters.

Random Disbursement Checks.


Section 4 Clever Examples of Embezzlement.

Payroll Tax Deposits.

Check Switching.

Ghosts on the Payroll and Ghost Vendors.

The Danger of Acronyms.

Bank Account Reconciliations.

Wire Transfers.

Postage Issues.


Manual Checks (Handwritten and Typed).

Auditing Receipts.

Section 5 Steps to Take If You Have Been Victimized by Fraud.

Documenting a Fraud Action Plan.

Fraud Examinations and Assembling the Fraud Team.

The Basics of Forensic Accounting.

Section 6 Identity Theft.

Identity Theft Issues.

Section 7 Internal Control Analysis, Documentation, and Recommendations for Improvement.

CPA Financial Statements, Management Letters, and Consulting Agreements.

Fraud Glossary.


Download Web Content

We've included all the policies and procedures found in Section 7 of the book in Word format here on this website. If you do not have Microsoft Word, you can download it.

Once you open the file, you can search for the specific policy or procedure you are interested in--these policies can then be customized to reflect the specific needs of your organization. The policies and procedures fall under the following broad categories:

  • Accounting and financial management
  • Internal control
  • Risk reduction
  • Office administration

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