It is important for bank statements to be reviewed and bank reconciliations to be completed each month to ensure the activity is accurate. This practice contributes to the mitigation of fraud risks as you are more aware of the activity that should be occurring and will be able to spot potential fraud attempts. Below are a few items to consider during your monthly review process.
- Security: The bank statement should be unopened prior to your review.
- Unusual Balance Fluctuations: You should review the beginning, ending, and average daily balances to see if they are consistent with your knowledge and experience of the bank account activity.
- Electronic Transfers: If applicable, determine if the electronic transfers in and out of the account are consistent with typical account activity.
- Unusual Checks: Scan cleared checks to see if any are unusually large or inconsistent with typical account activity.
- Follow-up on unusual items: To ensure that the people responsible for preparing checks and reconciling the bank statements know you are checking their work, promptly ask for explanations for all unusual items.
- Vendor Verification: Review all payees to ensure they are vendors that are known by you.
- Valid Signatures: Make sure the check signatures are authorized and do not appear forged.
- Unusual Handwriting and Manual Changes: Note any manual changes or handwriting on the checks that is not recognizable.
These items will help you conduct a thorough review of your organization’s bank activity and help you be aware of any potential fraudulent issues that may arise.
Please contact the Not-for-Profit Niche team at Gilliam Coble & Moser, LLP for further guidance.