Process Controls: 7 Steps to Help You Deter Fraud

by Dan Thaxton
About the Author

Fraud – it’s out of control.  Each year, U.S. companies lose more than $600 billion to fraud with counterfeiting and document fraud making up more than two-thirds of that, according to the Association of Certified Fraud Examiners.

Commercial checks, birth certificates, identification cards, licenses, motor vehicle titles, prescriptions, college transcripts, tickets and passes for events – any document of value is at risk. With law enforcement focused on violent crime and homeland security, however, there are limited governmental resources to address the problem. The challenge of reducing fraud and its associated losses falls primarily on the organization that owns the documents.

If you’ve followed the advice of experts, you’ve integrated multiple security features into vital documents and standardized their design to make them readily recognizable to those who use and accept them.  However, it’s important to recognize that the physical features of your documents are only half of an effective fraud defense.  It’s critical that you also establish secure processes for controlling document issuance and handling. 

Consider these steps for more secure document handling:

1. Securely store and audit important documents.  Protect your documents from theft by securing stock in locked rooms at all times, and by recording and auditing document control numbers. Limit access to materials at all stages: production, shipping, receiving, storage and use. Monitor your document production facility and audit regularly. Be sure incoming shipments of checks, prescription pads or other valuable documents are not identified on the shipping labels or containers.

2. Separate financial responsibilities.  In matters of money, make sure at least two separate groups of people are responsible for payment and reconciliation.

3. Use secure output-management systems to provide controls and audits to help prevent item theft or unauthorized use. The system should record every item issued and identify the authorizing individual at issuance.  Ideally, information from the issued documents should be forwarded to downstream authentication systems.

4. Use authentication devices.  Positive Pay and image-comparison services, as well as bar codes and data encryption solutions, help ensure the information matches up. Identity security or biometric solutions such as fingerprint, retina, iris and face recognition, take security to the next level.

5. Establish limits & reconciliation systems.   Establish limits on check amounts being disbursed; require special approval for higher amounts. Compare purchase orders to packing slips, and inventories to disbursements of printed documents. Secure stock for checks and other vital documents. Reconcile all transfers.

6. Know your people.   Review permanent and temporary hiring procedures to help assure you’re attracting reliable people you can trust to manage your vital documents.  Background checks are an important part of this process.  Then provide your staff with proper credentials that enable you to validate who they say they are.

7. Choose a reliable document provider.  Thoroughly evaluate potential vendors. Determine: Do they have secure facilities?  Are their operators trained to follow security protocols?  Do they have controls in place to prevent fraudulent orders?  Do they have the expertise to anticipate new forms of attack and develop new defenses? Do they understand the needs of your organization and the possible ways your documents might be compromised?

If you’d like to have a professional security audit of your facilities or want guidance in designing a secure document program, contact us today. Standard Register’s document security professionals can provide you with a full understanding of your vulnerabilities and the steps you can take to mitigate them.