Fraud Warning Signs Hidden in Your Bank Feed
Your guide to catching fraud early, protecting trust funds, and strengthening internal controls.
SECTION 1:
Suspicious Transaction Patterns
Warning Sign #1
Repeated round-dollar payments
Why it matters
Fraudsters often avoid cents to make transactions look routine.
How to fix it
Sort your bank feed by amount and flag frequent even-number payments.
Warning Sign #2
Weekend or after-hours withdrawals
Why it matters
These often happen when fewer eyes are on the accounts.
How to fix it
Cross-reference timestamps in your bank feed and filter non-business hours.
Warning Sign #3
Unusual transaction timing (end of month)
Why it matters
Fraudulent activity often spikes during financial close or holidays.
How to fix it
Pull your last 3 month-end bank feed exports and compare patterns.
SECTION 2:
Vendor & Payment Red Flags
Warning Sign #4
New vendors without W-9s or invoices
Why it matters
Fake vendors are a common internal fraud method.
How to fix it
Match vendor payments against your accounting software’s vendor master list.
Warning Sign #5
Multiple payments to the same vendor in short timeframes
Why it matters
Could indicate duplicate or split payments to evade limits.
How to fix it
Use filters in your software to identify multiple payments within 7–10 days.
Warning Sign #6
Vendor name and employee last name overlap
Why it matters
A staff member may have set up a personal company to siphon funds.
How to fix it
Cross-check vendor names with your employee directory.
SECTION 3:
Tenant-Related Fraud Indicators
Warning Sign #7
Refunds to tenants who’ve already moved out
Why it matters
These can be redirected to fraudulent accounts.
How to fix it
Match move-out dates with refund activity and mailing address changes.
Warning Sign #8
Security deposit transfers with no paper trail
Why it matters
Missing deposits are one of the most common violations.
How to fix it
Pull deposit ledger activity and cross-check against trust bank movement.
SECTION 4:
Month-End Close Issues
Warning Sign #9
Only one person handles all bank reconciliations
Why it matters
Lack of oversight is a breeding ground for fraud.
How to fix it
Review user permissions and accounting role segregation.
Warning Sign #10
Pushback when asked to explain unusual entries
Why it matters
Defensive behavior is often a sign of deeper issues.
How to fix it
Document all escalation attempts and response patterns.
Warning Sign #11
Employees never take vacations
Why it matters
Continuous control over accounts may hide fraud.
How to fix it
Run a time-off report and review delegation procedures.
SECTION 5:
Bank Feed & Reconciliation Traps
Warning Sign #12
Uncategorized or uncoded transactions
Why it matters
Fraud often hides in the “Other” or “Uncategorized” bucket.
How to fix it
Review your uncategorized expense list every week.
Warning Sign #13
Reconciliations that “force balance”
Why it matters
You may be masking real discrepancies.
How to fix it
Avoid journal entries that plug gaps without clear documentation.
Warning Sign #14
Manual entries to bank accounts
Why it matters
Bank accounts should reflect real cash activity only.
How to fix it
Flag any journal entries tied to cash or trust accounts.
Bonus
How to Strengthen Your Internal Controls
Still feel like your books are messy?
Here’s how to clean them up
Here’s how to clean them up
1.
Implement separation of dutiest
No one person should control all parts of the accounting process.
2.
Set up alerts in your bank and software
For large transactions, new vendors, or off-hours activity.
3.
Perform surprise audits
Rotate reviewers and occasionally audit trust activity without warning.
4.
Use dual approvals
Especially for wire transfers, refunds, or owner distributions.
5.
Invest in professional oversight
Outsourcing reconciliation or monthly closes provides a second line of defense.
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