Fraud Prevention Is A Must!
An employee or organizational fraud is causing severe troubles for companies around the globe. Small business startups to high-tech business giants face fraud. There is no denying that it is a menace that is stemming businesses from growing at a projected pace, restricting them to grow and expand their business operations both locally and globally. Unfortunately, every company, regardless of the size, type, and location, is affected by employee fraud both internally and externally. We may believe our in-house employees and stakeholders are loyal to our business and work to benefit the organization, but that is not true. Trust is not a control, and loyalty is something that is often no longer valued.
Fraud Prevention and Its Sad Realities
Businesses lose a large amount of money because they fail to take matters into their own hands. No matter how entrusted an employee may be, you can never judge him/her. As it is said, “never judge a book by its cover no matter how promising it may sound.” According to reports published by ACFE (Association of Certified Fraud Examiners, Inc.), organizations typically lose a significant 8% annual revenue to employee fraud and theft. This percentage indicates that fraud prevention is critical to reducing the loss. So, organizations need to develop effective prevention strategies and keep a plan in place to prevent fraudulent activities in your company and initiate wise moves to recover losses once the fraud is confirmed.
What Are Three Major Types Of Fraud?
A large amount of fraud still goes undetected, restricting companies from expanding their business operations. It also poses a threat to annual profits. It creates trouble for you to track and monitor your finances. There are numerous types of fraud that squeeze the profitability of the businesses. They are in three major categories; corruption, misappropriation of assets, and financial statement fraud. Misappropriation involves the exploitation of an organization’s resources by an employee. Corruption includes when an entrusted employee uses his/her influence to steal sensitive data of the company, violating their duty for bringing the data to their benefit. Financial statement fraud includes omitting or intentionally manipulating the organization’s financial reports.
Fraud prevention
Businesses need to realize that fraud is the major hurdle that prevents them from growing. Luckily, there are a wide variety of ways by which you can minimize fraud incidents. What you can do is implement the right procedures and controls for bringing things to your benefit. So, this shouldn’t be surprising for anyone to understand that fraud prevention is the first step towards ensuring a business’s long-term growth and success. So, here’s is what you can do:
Know Your Employees
Those who steal from you are indeed smarter than you and your imagination. Typically, before setting the trap, fraudulent employees build a reputation of honesty and loyalty to the business. This reputation often prevents suspicion of any unusual behavior in their attitude, and this is where it all begins. Fraudsters usually target that area of business where you have the least control of yours. So, it is ideal to know your employee and maintain direct control over your bookkeeping and accounting records for making business assumptions or decisions. Before hiring new employees, you need to do a reference check for each individual employed in a key position such as bookkeeping, accounting, inventory manager, etc.
Create Anti-Theft Policy and Stick with It
Veterans say that creating an anti-theft policy helps your efforts to fraud prevention. There would either be one or two individuals in any business who would-be fraudsters. Not every employee steals from you. Detecting and preventing fraud can be challenging for you, but it is certainly not an impossible task. Once fraud prevention tools of the trade are in place, the chances are that you will catch that stealing employee. The stealing employee must be brought to justice instead of your company’s anti-theft code and likely be kicked out of the company or handed over to the police for recovering losses.
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