financial institutions

Use QuickBooks’ Tools to Prevent Financial Fraud

Whether your accounting tasks are done on a single PC or you have multiple users working on different screens, it’s critical that you make use of all that QuickBooks offers in terms of internal controls.

First Stop: Audit Trail

An audit trail is a very large report that displays every addition, deletion and modification of every transaction. In older versions of QuickBooks you could turn it on and off, but it’s permanently on now.

Because of its size, you’ll probably have to use QuickBooks’ filtering tools to zero in on the user and/or date(s) you’re looking for. Go to Reports | Accountant & Taxes | Audit Trail. Click Customize Report | Filters to set up your search.

Your audit trail won’t alert you when someone tries to enter a prohibited area, and it won’t detect changes to lists. Setting up permissions will help (Company | Set Up Users and Passwords | Set Up Users), but you need more than that.


Figure 1: Be especially careful when granting user access to areas that contain customer, vendor and employee information. 

Run the Right Reports

Other QuickBooks features help prevent fraud as well. Review these reports regularly:

  • Closing Date Exception. Why were those changes necessary?
  • Voided/Deleted Transactions. Is there supporting documentation? Should you be reviewing these daily?
  • Expenses by Vendor Detail. Look for irregularities, especially multiple payments made to a vendor in a short period of time.
  • Check registers. Use the Balance Sheet for this. Go to Reports | Company & Financial | Balance Sheet Standard and customize the report for the correct period and, if necessary, for specific customers, vendors and/or jobs.

Adhere to Best Practices

You undoubtedly implement financial best practices in your personal life. You reconcile your accounts. You don’t give your online banking password to anyone. And you glance through your recently-posted transactions on your financial institutions’ websites.

If your company is large enough that you have multiple accounting employees, you probably can’t be as hands-on as you are at home. But you can still set up internal control procedures.


Figure 2: Debit? Credit? Reverse the transaction? No one should be making General Journal entries but you. It’s easy to err here; talk to us before using this feature. 

For example, if your company has grown to the point where you’re removed from the daily workflow, you may still want to have approval rights for some procedures, like bank balance adjustments, refunds and credits, printed checks (you should still be signing them), timesheets and expense reports.

It goes without saying that you should password-protect your QuickBooks company file and change the password regularly, even–and especially–if you are the entire accounting department. It’s important to protect yourself from external fraud too. We can do a review of your security procedures and make suggestions.

Reinforce the Rules


Figure 3: Anyone in your company who has access to accounting data should have a background check. 

Know who your employees are (consider running background checks) and, if you can, rotate the duties assigned to accounting staff. If you have only one person managing all of your bookkeeping work, conduct an even more thorough background search: credit, references, and criminal activity.

Finally, make sure that all employees understand the definition and consequences of fraud. Let them know about the steps being taken to prevent it, but do some unannounced auditing on your own. Include a session on fraud in orientation and get current staff up to speed. Explain that this is necessary for their protection, too. Make it easy to report fraud anonymously, with no fear of repercussions.

This may seem like a lot of extra tasks in your workday, but imagine the time you’ll lose tracking down fraudulent activity if it occurs.

If you have questions on this subject, or anything else, don’t hesitate to email or give us a call. We’re here to be your partner.

Receive a Faster Refund with Direct Deposit

The New Year has arrived, which means . . . it’s tax time!

This year, do you want your refund faster? Have it deposited directly into your bank account. More taxpayers are choosing direct deposit as the way to receive their federal tax refunds. More than 78.4 million people had their tax refunds deposited directly into their bank accounts last year. It’s the secure and convenient way to get money in your wallet faster.

      • Security. The payment is secure – there is no check to get lost. Each year thousands of refund checks are returned by the US Post Office to the IRS as undeliverable mail. Direct deposit eliminates undeliverable mail and is also the best way to guard against having a tax refund stolen.
      • Convenience. There’s no special trip to the bank to deposit a check!

You can also electronically direct your refund to multiple accounts. With the new “split refund” option, taxpayers can divide their refunds among as many as three checking or savings accounts and three different U.S. financial institutions. The split refund option, using Form 8888, is also available for paper returns.

Caution: Some financial institutions do not allow a joint refund to be deposited into an individual account. Check with your bank or other financial institution to make sure your direct deposit will be accepted. Also, make sure you have the correct nine-digit routing number and your account number when selecting direct deposit.

To request direct deposit, just ask us. We are happy to assist you.

Protecting Financial Records from Wild Weather

With the unsettled weather to date in 2011 and hurricane season now under way, individuals and businesses should safeguard their tax records by taking a few simple steps.

Create a Backup Set of Records Electronically. Taxpayers should keep a set of backup records in a safe place. The backup should be stored away from the original set.

Keeping a backup set of records – including, for example, bank statements, tax returns, insurance policies, etc. – is easier now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet. Even if the original records are provided only on paper, they can be scanned, which converts them to a digital format. Once documents are in electronic form, taxpayers can download them to a backup storage device, like an external hard drive, or burn them onto a CD or DVD.

Taxpayers should also consider online backup, which is the only way to ensure data is fully protected. With online backup, files are stored in another region of the country – so if a hurricane or other natural disaster occurs, documents remain safe.

Document Valuables. Another step a taxpayer can take to prepare for disaster is to photograph or videotape the contents of his or her home, especially items of higher value. Call us for more help compiling a room-by-room list of belongings.

A photographic record can help prove the market value of items for insurance and casualty loss claims. Photos should be stored with a friend or family member who lives outside the area, or in the taxpayer’s online backup solution.

Update Emergency Plans. Emergency plans should be reviewed annually. Personal and business situations change over time, as do preparedness needs. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.

Check on Fiduciary Bonds. Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

We’re Here to Help. If disaster strikes, call us right away. We can help you get back copies of tax returns and all attachments, including Forms W-2.

Scroll to top