Worried about internal financial fraud? Learn to harness accounting tech to protect your business by ApprovalMax

Tackling internal finance fraud by ApprovalMax

The accounting industry is among the most trusted professions in the world. Strict regulations hold them accountable, with a goal of creating and maintaining a culture of ethical professionalism. 

The profession is, however, facing challenges. A recent report from Bloomberg Tax reveals an aging workforce is leaving us with fewer accountants at a time when regulations are becoming increasingly challenging. This puts the strict standards of financial reporting at risk and puts the industry in a jeopardising position. 

If you’re struggling to keep up with your clients’ businesses and trying to navigate through a sea of change and turbulence, there are likely to be solutions in accounting technology – technology that is built specifically to ease the burden and protect businesses in these times.

In this article, we share some hot-button indicators relating to fraud. Specifically, what causes fraud to occur, and how to harness accounting technology to protect clients and the accountants trying to help them.

The perfect storm that points to fraud susceptibility

Not all clients are equally susceptible to fraud. Closer inspection and tougher fraud control measures are valuable for companies that fit into the list below. This perfect storm can easily enable someone under pressure with the right opportunity to leverage their position of trust.

• Greater size and complexity

• Company culture doesn’t promote ethics and accountability

• Businesses dealing with cash or inventory

• Company behind in applying emerging fraud prevention techniques

• Internal controls lacking, like segregation of duties and approval processes

While it is important to be aware of the risks associated with internal financial fraud, the level of concern should be proportional to the specific circumstances and controls in place.

Key vulnerabilities and how ApprovalMax helps

Pinpointing this issue of fraud and fixing has a lot to do with making changes to approval processes with clever new tech that is helpful in the areas listed below.

ApprovalMax was developed to solve just these pressing problems, helping to reign in spending and streamline the way staff select and pay suppliers.

1. Lack of accountability and oversight

Stricter approval processes introduce a higher level of accountability by requiring multiple layers of review and approval for financial transactions.

ApprovalMax helps ensure that spending decisions are scrutinised and authorised by appropriate individuals, reducing the risk of fraudulent activities going unnoticed.

2. Manual and paper-based processes

Traditional manual and paper-based approval processes are prone to errors, delays, and potential manipulation. Introducing new financial approval technology automates the process, reducing reliance on manual entry and paper documents.

ApprovalMax enhances efficiency, accuracy, and traceability while minimising opportunities for fraud through unauthorised modifications.

3. Inconsistent enforcement of controls

In organisations with decentralised approval processes, there may be inconsistencies in enforcing financial controls, leaving room for manipulation or circumvention. Implementing stricter approval processes helps establish consistent control standards across the organisation.

ApprovalMax supports this by ensuring that financial policies and procedures are followed uniformly, reducing the likelihood of fraud.

4. Inadequate segregation of duties

In some cases, the lack of clear segregation of duties creates opportunities for collusion and fraud.

Stricter financial spending approval processes with ApprovalMax help address this gap by clearly defining roles and responsibilities and ensuring that different individuals are involved at various stages of the approval process. This segregation of duties reduces the risk of individuals having sole control over critical financial decisions.

5. Inadequate fraud detection mechanisms

Traditional approval processes may lack robust mechanisms for detecting potential fraud. New financial approval technology like ApprovalMax incorporates fraud detection features such as automated rule-based triggers, anomaly detection algorithms, and data analytics capabilities. These tools can help identify suspicious patterns, unusual transactions, or deviations from normal spending patterns.

By addressing these gaps, stricter financial spending approval processes and new financial approval technology enhance the overall integrity of internal financial control systems. They promote accountability, transparency, and consistency in financial decision-making, reducing the risk of fraud and strengthening the organisation’s ability to prevent and detect fraudulent activity.