Forgery is a type of financial fraud that involves the unauthorized alteration of documents. Forgery crimes are often involved in fraud schemes to access documents and information that the criminal does not have access to, such as bank account information or your Social Security Number. Businesses are at risk of forgery when it comes to accounts payable, contracts, and legally binding agreements.
Forgery charges can be severe, with jail time and fines under the penal code. In addition, forgery charges may remain on the public record and impact the individual’s legal rights moving forward. For example, if someone is caught forging checks, the bank might ban the individual from their institution. Being caught with any type of forged instrument is a serious charge.
Forgery can take on many different forms. Here are some of the common examples of forgery:
Document forgery includes the altering of a written instrument, such as a will, deed, or contract. Some forgers engage in document forgery for identity theft, such as taking out a new credit card in someone else’s name. Regardless of the intent, document forgery uses false writing to alter documents, which can be a felony charge.
Signature forgery involves the falsification of another person’s signature. One example of signature forgery would be signing someone else’s name on a check to steal money from the account. This is one of the types of forgery that businesses need to be aware of. Asset misappropriation and fraud are commonly found in the accounts payable function. Without the proper controls, an employee could sign the name of the manager and cash an unauthorized check.
Misreporting data is a type of forgery since someone is intentionally reporting incorrect data. Lying about income on a tax return or neglecting to put down ownership of property are two examples of misreporting data. Falsifying this information does carry legal significance and can result in jail time and other fines under federal law.
Federal forgery involves the false making of federal documents, such as falsely claiming you have military credentials or creating fake identification cards. Federal forgery can also be used to generate fraudulent immigration documents.
The financial and legal risks of forgery are present in every business, especially growing organizations and companies that might not have the manpower to fully segregate duties. Here are some ways you can prevent and detect forgery in your company:
The first method to prevent forgery is to streamline signatures also known as implementing a segregation of duties. If the manager who signs the checks has a different signature for each batch, it can be difficult to detect fraudulent signatures. Every manager and signing officer should strive for consistency in their signature. This not only helps your internal team identify forgery but can also assist external parties, like your financial institution, in verifying the authenticity of each transaction.
Did you know your business has a credit report? Your credit is attached to your identification number and works similarly to personal credit. When you pull a credit report, you will be able to see all of your open liabilities, including credit cards and bank loans. If you notice a loan or credit card from an institution you don’t recognize, it can indicate fraud and forgery. Make it a priority to run a credit check every few months.
Ensuring your sensitive information is stored securely can reduce your risk of forgery. Information, like your bank account numbers and employee identification information, should only be accessible by authorized individuals. For example, a warehouse employee should not have access to your payroll function. Only individuals working in the payroll department should be able to view this information.
Expense management software does a majority of the backend security work on your behalf. This includes checking the legitimacy of vendors and tracking overall spending to detect outliers. The right expense management software program makes it easy to detect forgery and fraud. Not to mention, you have more control over your spending, which can lead to an increase in profitability.
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