Each year, thousands of organizations worldwide face employee fraud. These frauds result in billions of dollars’ worth of loss of goods and tangible assets. Generally, frauds are perpetrated or orchestrated by highly-trusted individuals holding key positions in the organization. The increased reliance and trust on entrusted employees often leads businesses to lose a significant portion of the money, which ultimately makes companies lose their competitive advantage. So, organizations need to prevent fraud no matter what it takes. Why? Because if they won’t, then soon they will be kicked out from the competitive race. Moreover, organizations don’t always have to acquire expensive technology and highly empowered tools and gear to prevent theft.
Some Auditors Are Biased, Some Help Business Grow!
Most organizations depend on their auditors or accountants to protect them against employee theft or fraud. You may be surprised to know that sometimes the auditors are also biased and inclined towards acquiring auditing contracts and hence money. Under this scenario, the auditors try to trick or deceive organizations with auditing results and keep the company in the dark. Since entrusted employees watch each other’s backs, people working in the organization hire their preferred auditors and cover their colleagues. This cover reveals that favoritism exists everywhere. Organizations need to audit their bookkeeping records and business books on their own. If not, then they need to hire a credible auditor themselves.
Implementing Internal Control!
To prevent fraud, organizations have to be proficient and hire individuals who can identify discrepancies in business books and statements. When it comes to auditor’s role, s/he needs to make certain spot checks and review the organization’s internal controls and accounting procedures. An auditor gets a clear picture of the company’s finances by systematically confirming the existence and value of the organization’s assets and extent of its liabilities. This way, organizations identify where their employees are stealing from them and what they need to do to prevent fraud.
Undoubtedly, employee fraud exists in almost every organization, making it clear that prevention is ‘must.’ Although in some organizations, the frequency of employee fraud is more significant than a typical organization. Such organizations are mostly related to the retail sector, where stealing from shelves is easy. So, by implementing the right policies and procedures, you can expect to prevent fraud and maintain a healthy growth cycle. The point is that internal growth defines your success, and whosoever learns that leveraging the right internal control never falls behind.
Set Up A Reporting System!
Moreover, organizations need to develop or set up the reporting system that would make employees aware of how things are going to be tracked and monitored by the superior management. When employees know that their performance is going to be tracked daily, they would be fair in their dealings and business roles and duties. When hiring employees, it is crucial to do a reference check for evaluating an applicant’s past performance and credibility. In today’s era, organizations cannot afford to hire individuals right away. They need to cross their reputation for judging their character and drive to work.
Understand business vulnerabilities!
On the contrary, organizations need to understand their vulnerabilities and continuously improve their business processes. If organizations desire to prevent fraud, they need to create a strategy and review the company’s fraud exposure risk. If there are loopholes, then organizations should act right away!
Review Business Books—Closely!
Even if organizations have little or no bookkeeping or accounting knowledge, a close watch on books will make bookkeepers aware that they cannot commit fraud. To prevent fraud, you don’t always have to use expensive technology to monitor your employees.
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