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How to use QuickBooks as a fraud detection tool

Many businesses and nonprofits use QuickBooks® as a cost-effective solution to manage their accounting processes. However, the software’s capabilities extend beyond organizing and streamlining your company’s accounting. QuickBooks can also help you detect fraud. Here’s an overview of the software’s fraud detection and prevention features:


Transaction audit trails


QuickBooks creates audit trails that capture user activities. This can help your company identify unauthorized changes. The audit trail includes:

  • The transaction date,

  • The user’s name, and

  • The type of change.

Administrators can apply filters to audit log data that can help evaluate what’s happening and determine whether further analysis is required.


Trend detection and analysis


QuickBooks can generate accounts receivable and accounts payable aging reports to identify unusual balances. Creating periodic and ad-hoc financial statements can help uncover sudden changes or irregularities in revenue, expenses and cash flow. Unexplained anomalies can foreshadow asset misappropriation and financial misstatement schemes.


Exception reporting


Exception reports can be used to flag transactions that deviate from established patterns or thresholds. Customized reports can focus on specific areas of concern, such as duplicate payments, unusual expense categories, voided transactions and vendor payments. QuickBooks also makes it easier to perform bank reconciliations to detect discrepancies between bank and company records that can signal fraud.


User roles and access


Controlling access to data and limiting a user’s ability to engage in certain transactions is a crucial component of an effective internal control system. QuickBooks allows businesses to assign predefined and customized user access. Simply put, by limiting user access rights, your business can reduce the likelihood of fraud happening.


Fraud awareness


In general, QuickBooks streamlines the detection, reporting and investigation of potential fraud. In turn, this creates a culture of fraud awareness that filters from the accounting department to the rest of the organization — and demonstrates that management is watching out for dishonest behavior. Proactive managers can thwart would-be fraudsters by minimizing perceived opportunities for fraud to happen, thereby minimizing the organization’s potential for losses.


More than an accounting solution


QuickBooks has built-in capabilities that make it a valuable tool for detecting and preventing fraud. Contact us for help using the functionality embedded in the software, adopting a proactive approach to loss prevention and fostering a culture of fraud awareness. If you unearth suspicious behaviors, our accounting pros can also conduct a formal forensic accounting investigation.


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