Gee, in the good old days we'd just look over the shoulder of the class brain. The manager, who was also the bookkeeper, would pay checks to vendors, destroy the canceled checks when they returned, create a duplicate vendor payment check for each and then deposit those checks into accounts she held at two banks. She successfully deposited 106 checks this way. The company's owner says the banks should have prevented the woman from depositing checks when the payee clearly listed other names. The first line of defense a business can take is to carefully screen prospective employees.
Adequate supervision is essential.
Dual control of check stock is also a wise precaution. Statement reconcilement should not be performed by the same person who writes the checks. Make sure the account ownership matches the named payee. And it doesn't happen just at small companies. Starting in August 1992, the woman used her job as a financial administration specialist to create false invoices for a fictitious company, Vertex Trucking.