SecurityGeneric MICR Fundamentals Guide 8-15• Use a check that is protected. Many checks are printed onpaper that has a chemical coating or has chemicals in itsinternal composition that react visually when solvents areapplied or erasure is attempted.• Avoid using correctable typewriter ribbons. The samefeature that let you easily remove typing mistakes enables acriminal to change the information on a check.• Enroll in a positive pay program. Many banks offer thistype of program to commercial accounts. The account holdermust give the bank a list of all checks issued each day byserial number and amount. The bank enters this informationin a database, and the amount and serial number arecompared to the list each time a check clears. If theinformation does not match, the bank notifies the accountholder and refuses payment until authorization is received.Positive pay does not prevent payment of a correct amount toa different payee, or honoring of a duplicate check thatarrives before the legitimate one.EmbezzlementEmbezzlement involves an employee writing checks for fictitiousinvoices, overpays invoices and then intercepts refunds, issuespayroll checks to nonexistent employees, overpays employeeaccomplices, or underpays bills and pockets the difference. Toprotect against embezzlement, use the following guidelines.• Separate duties. Assign responsibility for issuing checks anddepositing receipts to different employees.• Tighten procedures. Establish systems to positivelyassociate payments with invoices. Using checks withduplicate copies can be helpful.• Reconcile statements promptly. Balance the accounts assoon as you receive the bank statement and canceledchecks. Compare all issued checks to the current invoice file,and all deposits to the current receivables file. Ideally, thisshould be done by a third party that does not issue checks ordeposit receipts.• Perform audits. Inspect the status of all accounts at frequentbut irregular intervals.
