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How to Prevent Fraud and Embezzlement: A Checklist

All law firms should adopt an effective, documented system of internal controls to protect against acts of dishonest lawyers and staff. Incorporating the following procedures can greatly narrow if not eliminate windows of opportunity for wrongdoers.

  • Bank and credit card statements can be delivered to the managing partner at a home or separate address for the MP’s personal review.
  • Checks and debit memorandum should be reviewed with the statements.
  • Checks and wire transfers should require two signatures and signatures should be verified.
  • A copy of the bank reconciliation should be attached to each monthly bank statement and reviewed by two parties.
  • Finance or accounting personnel should not be signers on all bank accounts.
  • Checks received in the mail should be immediately endorsed by a two-person team who opens and processes the mail.
  • After checks are properly endorsed, the accounting or bookkeeping department should take charge of the checks for deposit.
  • Whenever possible, a check-protector machine should be used for entering the amount on the firm’s checks.

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