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jeff-williams
April 6, 2019
Solved

How do you handle accounting for bank fraud?

  • April 6, 2019
  • 4 replies
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We had someone use one of a cards to purchase something.  it was fraud and we got the credit back.  Just wonder how this is usually accounted for.  What GL do you put the expense in (the one the expense would normally be for?).  and then when we get the money back, we do a deposit int the reverse?
Best answer by Regina_Lend_A_Hand_Accounting

I would create an expense account and name it "Fraud Expense" and I would post both the credit card charge and the credit card credit to this account, this will net to zero. Then you will have an audit trail that isolates the fraudulent credit card charge and credit card credit in that account.

4 replies

Regina_Lend_A_Hand_Accounting
Regina_Lend_A_Hand_AccountingAnswer
April 6, 2019

I would create an expense account and name it "Fraud Expense" and I would post both the credit card charge and the credit card credit to this account, this will net to zero. Then you will have an audit trail that isolates the fraudulent credit card charge and credit card credit in that account.

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    jeff-williamsAuthor
    April 7, 2019

    I was leaning that way.  How would you categorize such an expense account?  Other Expenses -> Other Miscellaneous Expense 

    Regina_Lend_A_Hand_Accounting
    Regina_Lend_A_Hand_Accounting
    April 7, 2019

    I have always put it under Expenses/Bank Charges. It's an in-and-out by the bank and not really a business expense, and it nets to zero.

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      JT Mather
      January 17, 2020

      Hey Everyone, I created an Other Current Assets account to record fraudulent payment from our company's checking account used to pay an unknown person's credit card via chase epay. This happened in 2019, and funds have not been reimbursed to our company yet so I wanted to keep it on the books until funds are returned to us.

        M
        Mike Delancey
        May 14, 2024

        We had fraud on our bank account of over 100K.  I like the current asset concept as we got most of the money refunded in the next year. The money not refunded I'll expense at the end of the next year.

        What did you name the Other Current Asset?

        Thanks Mike

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        Carneil_C
        May 14, 2024

        Thanks for joining this thread and sharing your concern, Mike.

         

        I'm here to lend a hand to provide information about managing your accounts in QuickBooks Online (QBO).

         

        I can imagine the experience you've been through when your bank had to deal with fraud issues. I also appreciate your interest in the current asset concept. Regarding the name of the Other Current Asset, it ultimately depends on what name you prefer to give it.

         

        If you need additional assistance or have further questions regarding your books, I recommend reaching out to your accountant. They can provide you with professional advice and ensure the accuracy of your account. If you don't have one, you can use our accountant tool to look for one.

         

        For more information on adding accounts to your chart of accounts, check out this handy reference: Add an account to your chart of accounts in QuickBooks Online.

         

        If you want to make one inactive, you can also read this guide for a detailed process: Make an account inactive on your chart of accounts in QuickBooks Online.

         

        Feel free to reply on this thread if you have further concerns about your accounts in QBO. I'm here to help. Take care always.

        F
        funnybus
        August 25, 2020

        We were the victim of bank wire fraud. A good size amount of money was sent out of our business account.  Now after 2.5 months, our bank finally returned it to our account.

         

        My question is how do we handle the amount taken out and handle the amount that came back in so it doesn't show as expense out and income in as we have it now. 

         

        We are not very sed to chart of accounts, but could use some category

         

        Thanks.

        H
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