Prevention of Fraud and Financial Missteps

Most business owners don’t start out thinking about fraud, but it happens more often than you might expect, especially in small to mid-sized businesses. As your company grows, financial oversight becomes increasingly essential, and the risk of errors or misconduct rises with the volume of transactions. That’s where a controller comes in. A good controller doesn’t just manage the numbers; they act as a safeguard against missteps, ensuring your financial foundation is stable and protected.

Controllers are key in designing and enforcing internal controls that prevent intentional fraud and unintentional errors. This might include requiring multiple levels of approval for large payments, separating duties among staff so that no single person has control over the entire financial process, and conducting regular reconciliations. According to the Association of Certified Fraud Examiners, small businesses are particularly vulnerable to occupational fraud due to limited resources and oversight, with a median loss of $150,000 per incident.

Consider a real-world example. A company’s office manager handled both the receipt of customer payments and the posting of those payments in the accounting system. Without oversight, the manager began skimming funds and manipulating records to cover the theft. This went undetected for months until a controller was brought in, and discrepancies were noticed during a routine accounts receivable review. Once identified, the controller helped correct the books, implemented checks and balances, and trained staff on proper procedures to reduce future risk.

Even when fraud is not the issue, financial missteps can quietly damage your business. Inaccurate financial reporting, misclassified expenses, or failing to reconcile accounts can all lead to larger problems like tax penalties, cash flow shortages, or poor decision-making. A controller reviews your financials regularly, ensuring that transactions are recorded properly and reports truly reflect the health of your business. They also help correct past errors through clean-up accounting and set up systems to prevent future issues.

At JMP CPA, we offer fractional controller services tailored to support businesses that need expert financial oversight without the cost of hiring a full-time controller. We help you put the right systems in place, stay ahead of financial risks, and give you the peace of mind that your numbers are accurate and your business is protected. If you’re ready to take control of your finances, visit www.pufalcpa.com to learn how we can help.