A yearly audit from your CPA cannot – and should not – be replaced by internal auditing. But during the year, keep a trained eye on your company’s expense accounts. That’s an important step that can avert problems and bring savings to your company.

After all, there is plenty of time between annual audits for fraud perpetrators to spirit away your assets.

In one investigation of a fashion company, a trusted office manager siphoned $275,000 out of the expense accounts over 2.5 years (an average of $110,000 per year, between annual audits).

Can your business take a hit like that? Based on that investigation, the auditors fashioned these tips for keeping tabs on your expense accounts.

• Never ask anyone in a business setting to reproduce your signature, even on a birthday card. Those inclined to commit fraud know that if they are later caught forging your name, they can claim that you authorized the practice in the past and may successfully undercut your legal standing.
• Eliminate broad budget categories like “miscellaneous” that make it easy to hide fraudulent charges.
• Segregate duties such as signing or coding expense reports and monitoring budget overruns so that employees tempted to commit fraud will have a hard time covering their tracks.
• Accept only original receipts to discourage multiple submissions of the same expenditure. Let employees know that the receipts they turn in are subject to audit.
• Let employees know that expense policies apply to upper management as well as the rest of the work force.
• Have employees use a corporate credit card so you receive the statement.
• Do a small random audit or two each week. And quarterly, take a look at the biggest spenders to check for unusual expense patterns.

When expense accounts get padded, it’s often because employees are given too much control over the process. Don’t let that happen at your company.