We've been expanding our Audit offering ever since we launched it and our latest introduction is suspense accounts. The suspense account is one area where our Head of Education and Training, Jodilee, saw fraud back when she worked as an auditor. It's a critical part of your books to keep tabs on both in terms to preventing or detecting fraud and ensuring that your records are correct.
But what exactly is a suspense account? And how can the new suspense account function on Syft help you prevent error or fraud in your own business? Let's unpack this.
What is a suspense account?
You know when you receive money and you're not entirely sure where it came from? When this happens in a business, an account is created in which items are entered temporarily before the money is allocated to the correct or final account. Sometimes, only the debit side of an entry is known and the credit side needs to be booked into suspense until the final account is determined, or vice versa.
If your business is owed money by several different debtors, the money could be paying off any number of invoices, but if it isn't referenced correctly, it could take a while to figure out how to allocate it. And when there is unallocated money, there's the potential for misstatements and fraud.
In a suspense account fraud scheme, an embezzler will create fictitious debit entries to a suspense account and offset each entry with a credit to an endpoint under their control, such as their own personal bank account. This can lead to funds being funnelled smoothly into their accounts from loans in process, interdepartmental transfers, currency in transit, or other unallocated accounts.
Alternatively, someone could create duplicate contacts (with their own banking details attached) and then assign an unallocated amount to those fictitious contacts instead of the actual contacts of the same name. To prevent this from happening, suspense accounts must be cleared by reviewing the individual transactions and moving them to the appropriate account. Suspense accounts should also be reviewed to make sure that the appropriate allocation has been made to prevent potential fraud.
Suspense Accounts on Syft
Syft’s Suspense Account section helps you examine any ambiguous entries within suspense accounts. You can then analyze them and make sure they are classified correctly.
To get there, navigate to Audit and then to the Cleanup section. Here you will find Suspense Accounts. You will need to select the suspense accounts in your entity and then Syft will automatically identify the number of transactions in these accounts and monitor the end of period balances for these accounts.
So, what are you waiting for? Try this new feature and nip fraud in the bud.