QuickBooks® Features To Prevent Fraud 6-28-16

QuickBooks® Features To Prevent Fraud

In business, fraud is criminal or wrongful deception that intentionally produces personal or financial benefit; it often involves deliberate misrepresentations and defalcations that distort financial results. Most fraudulent transactions pertain to disbursements and often affect check preparation, expense statements and invoicing. As owners or managers, business leaders are principally responsible for preventing fraud in their enterprises. In enterprises that use QuickBooks®, QuickBooks® Administrators usually set up the software. By virtue of this function, the administrators reinforce the business leaders’ efforts to prevent fraud. With institutionalized internal control systems, QuickBooks®’ security features help to prevent fraud.

In setting up QuickBooks®, the administrator should assign one username for each user. Thus the administrator can set parameters for each user’s QuickBooks® activity for the enterprise. Additionally, unique user-names empower the administrator to monitor the users’ QuickBooks® activities. To ensure sustained fraud prevention, the administrator should regularly review set-up files and procedures.

QuickBooks®’ security features include its audit trail and other reports that prevent fraud. Older versions of QuickBooks® had audit trails that could be turned on and off; newer versions have audit trails that function indefinitely. The audit trail is an extensive document that provides details of every activity pertaining to each transaction. The activities include the editing, addition and deletion of transactions. Objectively reviewing the audit trail helps to prevent fraud. The audit trail provides no information about unauthorized access or changes to aspects of QuickBooks®. However, the software’s permission feature militates against fraud. To activate permissions, each enterprise’s QuickBooks® Administrator utilizes QuickBooks®’ Company menus and sub-menus.

Check Registers and reports titled Voided/Deleted Transactions, Closing Date Exception and Expenses by Vendor Detail are among QuickBooks®’ documents that aid the prevention of fraud. In the case of the Closing Date Exception report, the closing date enables monitoring of transactions recorded in closed accounting periods. QuickBooks®’ closing date is vital for preventing fraud and, because of this date, QuickBooks® users cannot enter suspect data in prior periods. The Closing Date Exception report enables responsible officers to monitor data entered up to the closing date.

Intuit, the developer of QuickBooks®, is strongly committed to its clients’ online security. Therefore, Intuit operates its Online Security Center that safeguards companies’ QuickBooks® data and reinforces the clients’ online security.

Some internal control systems that supplement QuickBooks® ’ anti-fraud features are safeguards for use of the Internet, best practices, documented policies and procedures, segregation of duties, periodic reconciliations of balance sheet accounts and periodic analysis of income statement accounts. Best practices include examining the antecedents of accounting employees and making employees know the importance of safeguarding the integrity of their QuickBooks® user accounts. Segregation of duties ensures that employees consistently utilize appropriate accounting checks and balances that prevent fraudulent activity concerning disbursements and receipts. Reconciliations and analysis foster the early detection and correction of any pertinent errors.

Fraud causes significant losses for business enterprises. In many cases, there is little or no restitution for such losses. QuickBooks®’ anti-fraud features, with supplementary internal control, are effective safeguards against fraud.