6 ways to prevent fraud

There is no foolproof way to prevent fraud at the hands of family members or anyone else, but you can inhibit perpetrators from stealing from you. Here are six internal controls to consider:

1. Share the work. Separate office duties so a single worker doesn’t completely control a sensitive area. For instance, have one person process accounts payable and another cut the checks.

2. Use locks, checks and balances. Set up a lockbox to receive payments and ask one employee to follow a strict procedure for recording them. Then ask someone else to check this document and deposit checks.

3. Make them take a break. Fraudsters dislike taking time off, so require (or at least strongly encourage) personnel to get away regularly. This way, you or other staffers can temporarily handle vacationing workers’ duties and see if anything is amiss.

4. Maintain mastery of your domain. Workers have a right to privacy — up to a point. Don’t allow anyone to keep locked desks or file cabinets that you can’t access.

5. Touch base with clients and others. Occasionally, call or visit your customers and vendors to discuss your workers. You may discover that some employees unduly influence dealings.

6. Get an outside opinion. Sometimes it takes an objective eye to see what’s wrong with a picture. Have your CPA routinely perform an internal control review at your company.

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Will a cost segregation study trigger an audit?
Some business owners forgo cost segregation studies for fear of getting audited. But continuing to incorrectly depreciate building assets could raise problems and trigger IRS attention, too. Besides, taxpayers who perform a cost segregation study can qualify for an automatic accounting method change — a pretty simple procedure.

Taking advantage of a cost segregation study performed by a professional during construction generally will not increase the likelihood of an audit.