I am working on audits this time of year and an auditor is always looking for the possibility that the numbers on the financial statements are wrong. We call this the risk of material misstatement or RMM for short!
There are a number of things that can cause a mistake in financial statements. There can be missing documents like invoices. The records could be wrong because no one has balanced the bank account. There could also be deliberate mistakes made, such as not reporting all of the sales that are made because you put the cash in your pocket instead of the bank. However, today I am talking about fraud.
Have you given any thought to how someone could steal money from you? Do you accept payments from customers in cash? Could any of your employees keep that cash and you would not figure it out? We call this thinking about fraud scenarios, which basically breaks down to, how could someone rip you off? Have you thought about that? Put it on your to-do list.
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