University of Rochester

Office of University Audit

Fraud Controls

Are internal controls in your area sufficient enough to minimize the potential for fraud? Or are controls weak enough that if a loss occurred, someone could say...."the writing was on the wall."

Controls to reduce or prevent fraud in a cash (or checks) receipt area.

Safeguarding cash or checks received involves proper internal controls surrounding the receipt process. Lack of any of the controls below may be an indication of weaknesses in the control structure that could allow fraud to occur.

— Mail should be opened by someone independent of the cashier, accounts receivable bookkeeper (the person entering charges and posting payments to the billing system), or other accounting personnel who may initiate or post entries to the billing system.

— The delivery of unopened business mail should be prohibited to employees having access to the accounting records or billing system.

— The employee responsible for opening the mail should complete to following tasks:

— Receipts not yet deposited should be secured in a locked cabinet at all times.

— When cash or checks are received from individuals, a receipt should be issued. All receipts should be prenumbered. An independent check of prenumbered receipts should be performed daily and reconciled to cash collections.

— Cash refunds should require approval

— Cash receipts should be deposited intact each day.

— Employees who handle receipts should be bonded.

— The accounts receivable bookkeeper should be restricted from preparing the bank deposit, obtaining access to the cash receipts log, and having access to collections from customers.

— Cashiers should be restricted from gaining access to the billing system and customer statements.

— Locations where the physical handling of cash takes place should be reasonably safeguarded.

— An employee independent of the cashier or accounts receivable functions should be assigned to handle customer complaints.

IF YOU SUSPECT THAT FRAUD HAS OCCURED IN YOUR AREA, CONTACT SECURITY OR UNIVERSITY AUDIT IMMEDIATELY