Page 91 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
bank teller that the check contains security features that are
listed on the back. The teller can then check the list of fea-
tures and verify that they exist.
• Control signature plates. If anyone can access the company’s
signature plates, then it is possible not only to forge checks,
but also to stamp authorized signatures on all sorts of legal
documents. Accordingly, these plates should always be kept in
the company safe.
• Fill in empty spaces on checks. If the line on a check that lists
the amount of cash to be paid is left partially blank, a forger
can insert extra numbers or words that will result in a much
larger check payment. Avoid this by having the software that
prints checks insert a line or series of characters in the spaces.
• Mutilate voided checks. A voided check can be retrieved and
cashed. To keep this from happening, use a stamping device
that cuts the word “void” into the surface of the check, there-
by sufficiently mutilating it so that it cannot be used again.
• Perform bank reconciliations. This is one of the most important
controls anywhere in a company, for it reveals all possible cash
inflows and outflows. The bank statement’s list of checks
cashed should be carefully compared to the company’s internal
records to ensure that checks have not been altered once they
leave the company, or that the books have not been altered to
disguise the amount of the checks. It is also necessary to com-
pare the bank’s deposit records to the books to spot discrepan-
cies that may be caused by someone taking checks or cash
from the batched bank deposits. Further, compare the records
of all company bank accounts to see if any check kiting is
taking place. In addition, it is absolutely fundamental that the
bank reconciliation be completed by someone who is com-
pletely unassociated with the payroll function, so that there is
no way for anyone to conceal their wrongdoings by altering
the bank reconciliation. Finally, because it is now possible to

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