Posts

Hand writing text caption inspiration showing Fraud concept meaning Criminal hacker security prevention written on old announcement road sign with background and space
The most important elements in the area of fraud are considered to be risk and materiality. The assessment of the importance of these factors will, to some degree, determine how serious the corporation treats the prevention and detection of fraud. It will also affect the means dedicated to fraud related tasks, so it is important for all assessors to give proper consideration to the risk and material of fraud in their organization. Not everyone can afford the high-tech resources needed for fraud prevention, but there are some definite preventive measures that can be practiced by anyone.

Types of Fraudulent Acts

Fraud can be committed through many types of media including mail, wire, phone, and the internet (Computer Crimes and Internet fraud). The international magnitudes of the web and comfort with which users can hide their location, the trouble of checking identity and legality online, and the simplicity with which hackers can distract browsers to fraudulent sites and steal credit card details have all subsidized to the very rapid growth of internet fraud. In some countries, tax fraud is also prosecuted under false billing or tax forgery.

Fraud as a Civil Wrong

The court structure observes fraud as a civil wrong, known as a “tort.” Each jurisdiction has a definite description of fraud, but it is mostly deliberated to be the intentional misrepresentation of essential facts. For a civil wrong to be reflected, certain features must be in place, including:

1. Demonstrating the state of mind of both the committer and victim at the time of the crime

2. Substantiating the fraud occurred with clear and conclusive evidence

Fraud as a Criminal Offense

Certain varieties of fraud are categorized as criminal offenses, mainly if the offender is involved in theft under false simulations. Like civil wrongs, certain features must be in place for fraud to fall under the category of a criminal offense.

1. Deliberate sham by false pretense with the intent to persuade the victim to part with money or property

2. The belief in the dishonesty by the victim, who actually parts with the money or property under the false pretenses

3. The perpetrator keeping, or aiming to keep, the money or property in inquiry

Fraud prevention

It is vital to an association, large or small, to have a fraud prevention plan in place. Fortunately, there are ways you can minimize fraud incidences by executing different measures and controls.

1. Know your employees: Fraud committers often display behavioral mannerisms that can indicate the intent to commit fraud. Observing and listening to employees can help you identify a potential fraud risk. It is important for management to be involved with their employees and take the time to get to know them.

2. Make employees aware/set up reporting system: Awareness affects all personnel. Everyone within the association should be conscious of the fraud risk policy containing types of fraud and the consequences associated with them. Those who are planning to commit fraud will know that management is watching and will hopefully be dissuaded by this.

3. Implement internal controls: Internal controls are the plans and/or programs that are applied to safeguard your company’s possessions, ensure the reliability of its accounting records, and prevent and detect fraud and theft.

4. Monitor vacation balances: You might be enthralled by the employees who haven’t missed a day of work in years. While these may sound like loyal employees, it could be a sign that these employees have something to hide and are worried that someone will detect their fraud if they were out of the office for a period of time. It is also a good idea to rotate workers to various jobs within a firm.

5. Hire Experts: Certified Fraud Examiners (CFE), Certified Public Accountants (CPA) and CPAs who are certified in Financial Forensics (CFF) can help you in establishing anti-fraud policies and procedures. These specialists can provide a wide range of facilities from complete internal control audits and forensic analysis in general to basic consultations.  

6. Live the corporate culture: A positive work environment can prevent employee fraud and theft. There should be a clear organizational structure, written policies and procedures, and fair employment practices. An open-door policy can also provide a great fraud prevention system as it gives employees open lines of communication with administration.

Final Note

Those who are willing to commit fraud do not differentiate. It can happen in large or small companies across various industries and geographic locations. Professional fraud can result in enormous financial loss, legal costs, and a ruined reputation that can eventually lead to the downfall of a business. Having the proper plans in place can suggestively reduce fraudulent activities from occurring or cut losses if a fraud has already occurred. Following through with the policy and enforcing the noted steps and consequences when someone is caught is crucial to preventing fraud.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Credit Cards Theft Concept. Hacker with Credit Cards on His Laptop Using Them For Unauthorized Shopping. Unauthorized Payments
Falling prey to a sale made with a stolen credit card is something many businesses, especially small ones, do not consider until they become a victim. It makes you vulnerable to losing money and trust. As a business, you want to minimize the risks and cut losses when it comes to such a fraud.

Even though credit card fraud is a rare occurrence, if your business accepts them, it is something you can’t neglect. It is estimated that such activities cause losses amounting to $16.31 Billion around the world and almost half of these are reported in the United States.

It can happen regardless of whether your business operates online or offline and can also be conducted on a massive scale. A particular group was caught and charged with conducting a credit card fraud that had caused losses of around $13 million over a period of 16 months.

Usually, holiday seasons are profitable times for all kinds of business owners. Sadly, the profits can fade away if any such loss takes place, resulting in additional liabilities for the business or the owner. It is seen that many businesses start placing preventative measures only when they are hit by a credit card fraud. It is suggested that owners take proactive measures to prevent such losses from affecting them in the first place.

Spotting Fraudulent Orders

If your business takes orders online or over the phone, there are a few things you can do to screen suspicious orders. One of the most common methods is to ask for AVS or CVV verification methods. These methods are specifically useful in transactions in which the credit card isn’t physically present.

Other things that you can look for are:

  • Large or expensive orders placed online, especially if they require things like same day shipping or overnight shipping
  • Buyers who claim they will place a large order and ask for a catalog or list of what you sell
  • Customers who are hesitant to provide personal information, such as phone numbers or full name
  • Shipping to foreign countries paid by a US card or orders with different billing and delivery addresses

It’s not feasible to label a transaction as fraud if it fits only one condition. However, the presence of several reasons could be reason enough to be suspicious. It is suggested that you investigate the matter in order to avoid losses.

What should be done to further investigate the order?

If you find several of the above things applicable to the order, you have legit reasons to be suspicious. Now, in order to thoroughly analyze whether it is fraudulent or not, you can do a variety of checks to make sure that the order is being placed by the cardholder or someone authorized by the credit card holder. These are:

  • Request complete information on the cardholder such as name, address, phone number and zip code.
  • Make CVV a compulsory requirement for transactions.
  • Verify the provided information through the bank or whatever other verification system is practiced in your area. If the information doesn’t match up, decline the order.
  • Block transactions through a service that intercepts the order based on the region of origin and other things. These services are available easily for a fee.
  • Attempt to call on the contact information of the cardholder. Decline the order if you can’t reach the cardholder.
  • Look up local orders and match them with phone numbers and addresses in the phone book.
  • Utilize an address verification service to mark suspicious sales and block them, if need be.
  • When you ship the product, it is smart to send a reminder message. Sometimes people forget what they have ordered. Sending a letter to the billing address may also help you verify the order.

If you take up these steps, which are essential for cutting losses, your business will be doing all it can to avoid credit card fraud.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Stealing men with camouflage facial mask. Climbing the wall of the house to peep
Many organizations and business owners face fraud each year due to their employees or business partners. New entrepreneurial start-ups and small businesses are more vulnerable. The risk of fraud has increased due to the advancement of technology and progressive development of the world into a global village. The increased awareness of technological development and complex organizational structure requires corporations to incorporate internal anti-fraud approaches to combat fraud. According to 2014 research reports by global nation, organizations face 5 % loss due to fraud each year, in which 85 % of serious fraud cases were committed by internal employees. Organizations should develop multi-layered fraud prevention strategies while keeping these statistics in view.

Following are the warning signs to detect fraud and stealing by an accountant.

Change in Habits and Behavior

A good manager should know their employees. They manage their time in order to have frequent conversations with each of them. Good managers are concerned and aware about any type of problems they are facing in their professional or personal lives. The basic information about your employee’s family, life, and habits will help a lot in detecting any change in habits of an employee.

The first sign that your accountant is stealing from you is a change in their habits. Suddenly becoming more proactive in your business, becoming disobedient towards you, or on the phone more frequently are all signs that could be a red flag. Also, if they are suddenly working during times that no supervisor is present, it’s important to keep an eye on their activities.  

Accountant in Bad Waters

Sometimes an accountant under financial stress can turn to fraud to fulfill their needs. The financial crisis could possibly be from the following circumstances: 

Unexpected debt

Sudden debt faced by an accountant due to gambling, drinking, or divorce may be a reason for their fraudulent behavior. An accountant in financial strain may be a potential risk to your business. The financial burdens act as the trigger for theft.

Spending more than earning

If an accountant is spending more than they are earning, it could be a warning sign. Spending excessively on cars, shopping, homes, or taking loans all lead to financial strain and they may think the only way out of this is by committing fraud.

Loose internal controls

A company’s loose internal controls are providing an opportunity for theft. Easy access to assets, checkbooks, or signed stamps lead the embezzler to find it easy to steal.

How to Prevent Fraud

Fraud deterrence is essential for all organizations. The bigger the organization, the more the chances of fraud increase. Fraud is as old as human history and can happen to any company or business despite the organizational structure and the number of workers. Small business managers tend to trust their workers more than bigger organizations. There may be weak internal controls. Fraud effects the finances, image, and morale of the company. All factors decline after a fraudulent case takes place. Most organizations adopt shortcuts for fraud prevention. These tactics largely decrease the opportunity for fraud.

Internal controls

The internal controls of a system and organization define the plans to prevent the company and its assets from any kind of fraud and theft. This system should be revised frequently to analyze its effectiveness. It should be regularly updated according to the new needs, development, and advancements of a company. Internal controls should clearly define accountability and compliance of its employees.

Documentation is the integral part of an internal control system and the most important tactic for fraud prevention. All procedures and transactions should be documented to minimize fraud. Every expense should be approved and countersigned by a managerial level employee so that the validity of receipts and expenses can be ensured. Restrict all physical and technical approaches to documents and information.

Segregation of duties

Clear segregation of duties is crucial for internal control. Distribution of bookkeeping and payments among two or more accountants or bookkeepers helps to prevent fraud.

Outsource accountant

One of the best ways to prevent fraud is to outsource accounting and bookkeeping functions to a third party.

Be systematic

Use accounting software to prevent fraud. QuickBooks handles all the key processes of accounting and prevents fraud. Assign limited rights to all employees according to their job descriptions and responsibilities. Don’t share passwords and logins.

Conclusion

Fraud in business can result in major financial loss, wastage of time and a ruined reputation. The implementation of multilayered fraud risk strategies leads to a successful business that is protected from fraud and theft.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Businessman putting dollar banknotes into pocket
Regular inventory check, financial books audits, establishing a code of conduct, setting up organizational checks and balances, instituting policies and procedures, personally reviewing financial statements each month and other similar preemptive tools can be implemented in the business to prevent employee fraud and theft.

Unarguably, employee theft is costly to businesses. According to studies, businesses lose 9% of their annual revenues to fraud or theft and it causes American business owners to lose about $60 billion each year. Yes, you heard it right! The staggering figures bear testimony to the fact that employee fraud or theft has been on the rise in most parts of the world, America being on the top of the list. People are getting rightly concerned about the fate of their business, as they should be.

Protecting your business against employee theft and fraud is no easy feat. However, there are ways in which you can minimize fraud and prevent employees from stealing from you.

Establish a Code of Conduct

If you expect to maintain complete control over your business and its daily operations, you have to establish a code of conduct for your employees. Most successful retail establishments across the globe consider it a sole reason for their success. No business can tolerate any illegal or unethical activity towards new and privileged customers, vendors or suppliers, employees or the company itself. Therefore, it is safe to say that establishing a code of conduct can actually prevent employee fraud or theft.

Once employees would know the repercussions of their bad or opportunistic behavior, they will be more likely to avoid taking risks and stealing from you. Upon a successful hire, the code of conduct must be communicated, acknowledged and readily signed by new employees so that they will have less motivation to cheat or steal.

Plan Organizational Checks and Balances

Whether your business is small or large, setting up organizational checks and balances helps you to monitor everything on your own. It doesn’t matter whether your manager has been with you for the past 10 years, intentions can change at any time which means you should never delegate the entire responsibility of managing everything on to your manager. Your accountant may be a pro at bookkeeping and maintaining the financial books, but you, as an owner, should take an interest in tracking core things like the handling of deposits and payments, invoices and order emails, and transaction documents. By setting up a surprise or regular organizational checks and balances, you can easily prevent employee fraud or theft.

Institute Policies and Procedures

Effective organizational policies and procedures help prevent fishy activities from employees. Once employees know the pros and cons of following organizational policies and procedures, they will know the repercussions and abide by the rules and regulations of the company. In manual accounting, accountants usually have more control over credits and finances, which means there is an open opportunity for unethical accountants to steal from you by manipulating the financial books and records. This has to stop, no matter what, and you can prevent employee fraud or theft by introducing advanced or custom-made accounting software. By integrating accounting software, you can expect to manage your payroll and maintain a better control over the credit limits and finances.

Watch Employee Behavior

Where employees can turn things around for you and make you successful, they can also cause you to lose everything. No matter how much you trust them, you should always have a backup plan to discourage any unethical or illegal activity. If you notice suspicious things going on around you such as a misplacement of important documents, employees that are reluctant to help you, or giving excessive attention or discounts—look into it.

Stretching an extra mile to know your employees’ changing behavior will help you save a lot of money and help prevent employee fraud or theft. You can install CCTV cameras, track vendor invoices and important files, employ efficient accounting software, give employees’ fringe benefits and bonuses, arrange weekly/monthly workshops to help discourage unlawful or unethical activities and prevent employee fraud or theft.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Criminal counting ransom money for kidnapping, blackmail, contract killing, stock footage
There is certainly no denying the fact that businesses fear embezzlement, fraud, and theft. According to a studies, embezzlement eats up a significant portion of revenue and annual profits. It restricts companies in creating a high-level impact in the market which further prevents them from expanding their business operations. Statistics reveal that trusted employees steal more from businesses than other individuals or stakeholders in the company.

Top executives and business owners from around the globe have devised methods to protect their business’s from fraudulent activities. But, still, no one has yet come up with a magic formula to completely prevent the unfortunate reality. Employee theft and fraud are eminent. Employees’ opportunistic behavior often leads them to commit financial crimes causing companies a great deal of financial stress and trauma. A staggering 87% of embezzlement cases come from trusted partners and employees, which is worth contemplating.

Small Businesses Are More Vulnerable To Fraud

The media is filled with thousands of stories of serious fraud. This indicates that the life of business owners, especially entrepreneurs, is never easy. They have to regularly come up with different ways to protect themselves against embezzlement. Inexperienced business owners often lack the seasoned wisdom to make a distinction between their employees, especially those who are stealing. Those who have a habit of stealing are quite often smart, confident, and less concerned about losing their jobs, as they already know the repercussions.

Those who steal without the fear of getting caught can ruin a business entirely. Small businesses may be more vulnerable to fraud, but that doesn’t mean that nothing can be done to prevent embezzlement. Being a business owner, it is your duty and responsibility to maintain complete control over your finances and other important matters of your business. Developing a framework and streamlining operations requires you to know every fine detail. From bookkeeping accounts and bank statements to inventory and clients, you must know everything prior to making important business decisions. On top of all of this, unfortunately, you must be aware of the possibility of fraudulent activities in your business as well.

Protecting your business against embezzlement may be hard, but it is not impossible. Below, we have outlined how you can maintain complete control over your business and prevent cash, goods, and sensitive information from becoming the next case of embezzlement.

Know Your Employees and Notice Changes in Their Commitment

Sadly, your employees are a potential threat to your business because you never know who will steal from you. It could be a new employee just coming into the company or a trusted veteran. However, with minimal effort, you can prevent a lot of anguish. To protect your business against embezzlement, you must know your employees well. Things such as sudden changes in habit and behavior, a lifestyle above salary-levels, overnight shifts, strong objections to new accounting regulations, discrepancies in financial records, drugs, gambling, etc. may be warning signs of embezzlement.

Keep a Check and Balance System in Place

Obviously, it is hard to manage everything manually. It is more beneficial to create a custom solution tailored to your business needs in order to record, track, and analyze things wisely for better decision making. In layman terms, what’s going in and out of your business must be recorded chronologically in order to have a clear snapshot of finances and other important business matters. Keeping your personal and business accounts separate allows you to track personal and business expenses independently. This way, you will gain a true picture of your business, which will further prevent embezzlement.

Create a System to Report Theft or Fraud

A reporting system system needs to be very carefully incorporated into a business, as it shouldn’t signal employees as a sign that you don’t trust them. Losing the trust of your employees is hard to remedy. Therefore, you must keep all of the complaints filed by your employees confidential and secure from their co-workers. This way, employees feel more encouraged and safe in reporting fraudulent activities that they think might be happening. This will help you protect your business against embezzlement.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Fraud sign
Your business might have installed security systems in office areas and you may have security checks in your accounting software. There are procedures implemented to stop fraud, but, even then, fraudulent practices can be brewing. As a small business owner, you must not only rely on carrying out day to day business operations and bookkeeping duties. You must keep a close look for warning signs that may indicate your business is a victim of fraud.

Here are some simple but important warning signs that indicate your business is vulnerable to fraud.

Too Much Access

If you have given too much access to the financial bookkeeping of your business, then your business is already at risk of fraud. A single employee should not be given all of the access to receiving cash, payments, tracking expenses and various other bookkeeping functions. Instead, separate your employees for different steps of bookkeeping management. There should be separate people for bank transactions, expenses, receiving cash from customers, paying bills, and bank deposits.

Difference in Accounting Statements

If you have an electronic system or your accounting statements are done manually on a register, the financial statements should match with the cash flow statements and balance sheet. In manual bookkeeping, there is always a chance of honest error, but keep an eye on any difference in the amount in accounting statements.

One Employee is Spending More than Usual

If one of your employees starts spending more than usual, keep a close eye on their activities in your business functions. There is a possibility they might be involved in some kind of fraudulent practice. A fixed pay usually does not leave room for spending extra than actual needs.

Always Provide Emotional Support to your Employees

Most of the frauds in small business are done to meet desperate ends for an employee. A simple relaxation and support in a time of distress, such as flexible office times, make your employees more loyal to the company.  Get to know your employees and let them know that you support them.  This will make it harder for them to be disloyal to you.

Excessive Transactions

If there are numerous transactions to clear errors, it might be done in an attempt to hide some fraud. If there is more than one payment for a single bill, it again might be the case of fraud. Always keep a sharp eye on the bookkeeping in your business.

Expanding Standard Expenses

Employees of a business are given various privileges. They can be paid credit for the phone calls they make during business functions. Many are provided with fuel for their cars or other travel and transportation expenses. Some employees may try to earn a profit for themselves out of the expenses that your company pays. For example, say they get a $15 bill for a taxi-ride which can easily be availed in less than $10. Many use office phones for private calls. To minimize personal profits on such claims, a receipt should be asked for to accompany the claim from the employee.

Overcharging the Company Cards

Many businesses give corporate credit cards to its employees when they are going on a business trip. When the credit card bill arrives, do not blindly sign the bill. Check the outlets where this card had been used. Your business money should not be used for an employee’s recreational activities during business trips other than necessary expenses, unless approved beforehand.

Double Billing

Many frauds fall into a double billing fraud type. An employee uses a business credit card for making an expense. Then they again submit the receipt for the same expense to reimburse the money, hoping you won’t notice. There should be a strict procedure to keep a check and balance on double billing frauds.

Refusal to Leave Bookkeeping Tasks to Others

If an employee is working alone in a company and is not allowing others to “look over their should”, if you will, a check on their activities must be kept. They might be involved in fraudulent practices and attempting to hide their activities.

Unusual Working Hours

If an employee has a routine of unusual working hours, they might also be involved in some kind of fraud in your business bookkeeping. For example, he/she is leaving later than normal office times and doing overtime without a demand for extra payment. These are signs of some kind of special interest in your business that lead to negative behavior.

Conclusion

Your business can be more vulnerable to fraud than you think, even if you have safety measures in place. You must be aware of unusual practices going on in your office. Build a good relationship with your employees. At the same time, keep a close look on the practices going on in your office to prevent fraud in your business.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Creative abstract cyber crime, online piracy and internet web hacking concept: 3D render illustration of the macro view of metal handcuffs and wooden judge mallet, gavel or hammer on laptop notebook computer keyboard with selective focus effect
When your business is hacked, it affects not only information related to the business, but also information of your clients. For a business owner, situations like these can end up in gravely negative consequences. The hacker could gain full access to all of your business’s bookkeeping, which could be disastrous.

There may be a small business owner thinking, “I run a small business, who would hack me?!” Regrettably, you’re mistaken. Smaller businesses are actually more prone to hackers and security threat than larger businesses are. 

Marketing is another area that can deeply hurt your business if your website is hacked. If you receive malicious codes on your website, it will intensely influence your search rankings. Search engines like Google bring your website up, not just for links and content, but also if that particular website is secure for users. If your website is compromised, you will find a deflation of your domain until you get it cleaned up.

The Major Consequences for a Business that has been Hacked

 

Loss in Sales

Bad news travels faster than the speed of light. If your business website is hacked and information has been compromised, it is most likely that the public will stay away from your business, no matter what.

Reputation can be Damaged

Once your business website is hacked, it can be a challenge to get your good reputation back. It is extremely hard to win consumer trust in the first place. Rebuilding their trust is even harder. The best you can do is spend hours and hours on public relations, marketing, and reputation management.

Costs from Compensation

Once you know your business website has been compromised, you need to win back your clients and consumers. You may need to give compensation to your clients through offering identity theft insurance and/or free credit monitoring. It may be free for your clients, but for you, it is a lot more than free.

Legal Action

Unfortunately, lawsuits are routine nowadays. Irrespective of if you win or lose, legal action expenditures can be quite huge. If the breach happened because your company made mistakes, it’s probably safe to assume that the law will not stand on your side.

Fines

Here’s some good news for you. If an individual’s credit card is used fraudulently, they are not required to foot the bill. The bank will do the refunding. And, now, the bad news. You will be passed on those charges by the bank as a fine.

Audits by the Government

Irrespective of the country you are doing business in, if it is large enough, there is a big possibility that the country’s government organization (in our case, the Federal Trade Commission of the United States of America) will come knocking at your door to perform an audit. There may even be a chance that they decide to impose a fine on your company if they find non-compliance to guidelines like PCI DSS (Payment Card Industry Data Security Standard).

Costs for Remediation

Don’t think that the consequences end here. You will also be required to fulfill internal remediation costs. What are remediation costs, you say? Well these costs comprise of the following:

  1. Costs to inspect what happened
  2. Costs to improve your security position
  3. Costs of firing and hiring employees
  4. Costs of whatever it will take to re-mediate your inner information security environment

Conclusion

With such dire consequences like these, you can see how easily the costs mount up when a business is hacked. Most businesses find it extremely difficult to recover from not complying with the PCI DSS Standards.  The best you can do is ensure that you are following the rules and regulations of your area and initiate security standards into your company.


Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Fraud word on colorful dices
Many organizations and business owners face fraud each year due to their employees or business partners. New entrepreneur startups and small businesses are more vulnerable. The risk of fraud has increased due to the advancement of technology and progressive development of the world into a global village. The increased awareness of technological developments and complex organizational structure requires corporations to incorporate internal anti-fraud approaches to combat fraud. According to 2014 research reports by global nation, organizations face 5 % loss due to fraud each year in which 85 % of serious fraud cases were committed by internal employees. Organizations should develop multi-layered fraud prevention strategies while keeping these statistics in view.

Organizations and businesses should do the following 10 things when they suspect fraud.

1. Be Calm and Don’t Panic

Fraud is scary and you will likely want to panic and react abruptly when you suspect fraud at your organization. You may terminate the fraudster on the spot or meet them head-on for confrontation. But these are harmful rather than good for the organization. Don’t react when you are emotional or angry. Prepare a plan, investigate, and do what is beneficial for the organization. Make strategies and policies to handle fraud before it happens.

2. React Logically

It is not preferable to overreact or have no reaction at all to a suspect. If you don’t react and take it easy, the perpetrator will think that they are free to do anything. Ignorant behavior towards fraud will make it worse and the perpetrator commit fraud without any fear of consequences. Always take action when you suspect the fraud but react logically.

3. Be Careful

If you suspect fraud, don’t declare it until you have evidence. If you react without evidence, the fraudsters become alert. The fraudster will try to hide and destroy evidence if they know they are being exposed and you are keeping an eye on them. After suspecting something is wrong, don’t make it obvious. Investigate carefully, otherwise, you will not be able to get any evidence.

4. Back up Financial Data

Always maintain backup data of your organization’s financial dealings. Save on hard copies or hard drives. Get a copy of a hard drive of your suspect discreetly. Preserve all records of transactions, emails, payroll, and bookkeeping. Perpetrators often utilize this information, especially bookkeeping records, to commit fraud.

5. Rehiring

Be mindful and prepare for hiring new personnel. Termination is the minimum consequence of fraud detection. Managers and executives are often so involved in the actual fraud itself that filling the new position can be challenging. Prepare yourself for such challenges.

6. Defend your Reputation

Fraud damages the image and reputation of the organization in front of the public, customers, partners and donors. Try to react calmly and defend your reputation. Resume trust of partners and customers by assuring them that the organization has taken corrective measures.

7. Don’t Save Money

Financial loss due to fraud is recoverable, but the reputation is not recoverable. Hire a certified fraud examiner to make policies for fraud prevention and detection. Your organization may try to save money by not hiring a certified fraud examiner but then will suffer a lot after an incident of fraud. Realize that money is not everything. The thing that matters more is the hard-earned reputation which can easily be damaged by fraud.

8. Set an Example

Set an example by handling fraudsters with tight hands, otherwise, you may encourage others to commit fraud in the future. The penalties recommended after fraud are a civil lawsuit, termination, and criminal prosecution. Impose all three penalties severely, if possible. The employees will see that there is zero tolerance for fraud in your organization and they will face severe consequences if they go there.

9. Get Help

Don’t try to handle fraud on your own because it involves accounting and legal issues. Call a certified fraud examiner for help. They know where to get evidence and how to explain it to the legal system.

10.   Make Positive Changes

Learn from an incident of fraud and prepare the policy for detection and prevention of fraud in the future.

Conclusion

Fraud in business can result in major financial loss, wastage of time, and a ruined reputation. Fraud should be handled strictly when suspected.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

Employee May Be Stealing - Complete Controller

According to a report published by the Society for Certified Fraud Examiners in 2016, 30% of frauds occurred in small businesses with less than 100 employees. Small businesses have fewer anti-fraud reins in place than large organizations that make them especially defenseless to fraud. Frauds are common in small companies because they lack special security check-ups and foolproof systems. A small business may have installed accounting software, but the accounting software for small business may require many security features reserved for software purchased by big corporations. A simple reason for this is the price difference in this software, and many business owners go for the cheapest option. 

If a small business owner has a stellar accounting software, the chance of fraud remains, unfortunately. In small businesses, many times, a single person is entrusted with operating all accounting and bookkeeping functions. Passing all bookkeeping into the hands of an only person is a significant reason for small business fraud. Check out America's Best Bookkeepers

In charge of all of the accounting and bookkeeping functions, this person in a small business is most likely the most trusted employee in the company.

Best Employee or Fraudster?

Let us portray how the “best employee” could be stealing money from your business. If you find the following unusual behavior in your best employee, they could turn out to be someone different than you thought.

Unusual working hours

When a single employee performs all of the bookkeeping functions, they might have to work long hours. Of course, most of the time, that doesn’t turn out to be a problem.  However, this routine could be a warning sign.

If an employee has a routine of odd working hours, there is a possibility that they are involved in fraudulent behavior with your business bookkeeping. If the employee regularly leaves late and works overtime without asking for extra pay,  it could be a sign of “special interest” in your business.  Like most of us, you think this is going in your favor, but the case might be the complete opposite.

Refusal to leave bookkeeping tasks to others

If an employee is working hard for a company but is unwilling to leave any accounting and bookkeeping work for others, a check on their activities must be kept. They might be involved in fraudulent practices.  If the employee refuses to allow others to look at their work or regularly gets offensive when asked about it, this is a warning sign. Check out America's Best Bookkeepers

Too much access

If you have given too much access to your business’s financial bookkeeping, your business is already at risk of fraud. A single employee should not be given all access to receiving cash, payments, tracking expenses, and various other bookkeeping functions—delegate employees for different steps of bookkeeping management. There should be separate people for bank transactions, expenses, receiving cash from customers, paying bills, and bank deposits.

Your trusted employee is spending lavishly

If your employee starts spending more than usual, keep a close eye on their activities in your business functions. They might be involved in some fraudulent practices. A fixed pay usually does not leave room for spending lavishly all of a sudden.

How to Spot the Fraud

The difference in accounting statements

Whether you have an electronic system or your accounting statements are done manually on a register, the financial statements should match the cash flow statements and balance sheet. In manual bookkeeping, there is always a chance of an honest error, but keep an eye on any difference in the number of accounting statements. Check out America's Best Bookkeepers

Match the transactions with real bills and invoices

If there is more than one payment for a single bill, it again might be the case of fraud. Keep an eye on the bookkeeping in your business. Check the bills for duplication.

Audit

Business ready for an audit at all times is a business with lesser discrepancies. Conducting regular audits will discourage employees from committing fraud or theft as there is more of a chance they will be caught.

Conclusion

The concept of your “best employee” in a small business can be dangerous. If your best employ has any of the above suspicious behavior, it’s time to take steps to ensure your business is safe. Dividing job responsibilities, reviewing all monthly reports, and limiting manual payments can prevent your employees from deciding to go down that road.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
fraud prevention - Complete Controller

Virtually every business faces fraud and has cost companies an estimated 5 percent of their annual profits. Businesses who lack preemptive fraud prevention measures are the most at risk. Fraud itself can be a civil wrong or a criminal wrong, and in some cases, it may cause no loss of money, property, or legal right but can still be an element of another civil or criminal wrong. Traditional in-house controls can be ineffective in averting fraud. The most important thing to do is to discover what steps can be adopted by individuals to protect their business from fraud.

Types of frauds Check out America's Best Bookkeepers

There are a number of techniques to commit fraud, as criminals use their imagination in finding new methods every day as the world progresses. Some of the most generally committed types of fraud include:

  1. Check Fraud: Check fraud happens when an individual deliberately pays for something with a check and knows that there is not sufficient cash in the account to cover the cost or when a person fakes or forges a check stolen from someone else.
  2. Internet Sales: Internet frauds are becoming more widespread since the world depends severely on technology. This type of fraud comprises of selling fake or forged items or taking fees with no intention to ship or deliver the item.
  3. Website Misdirection: This happens when hackers copycat respectable establishments such as Amazon, eBay, or PayPal, transmitting customers to another website where they enter their credit card information. The criminal then uses this information to make personal acquisitions.
  4. Charities Fraud: For several years, felons have benefited from the fact that Americans generously give to praiseworthy causes. Convicts implore individuals to make contributions to different foundations that do not exist. Check out America's Best Bookkeepers
  5. Work-from-home Scams: Operating from home sounds like a dream come true to many people, so it is not astounding that a number of individuals fall for this sort of fraud each year. Criminals promise a salary to people who sign up for their fabricated work-from-home job, often demanding that money be paid upfront with the promise of a big settlement in a short amount of time.
  6. Identity Theft: One of the most frequently executed types of fraud in this age, identity theft mugs victims of their money, credit rating, and personal identity. Impostors obtain credit cards, bank accounts, and other personal information, using them for personal gain.
  7. Credit card Fraud: In today’s environment of automated transactions, credit card fraud has become a dominant crime. By gaining people’s credit card information, through a variety of resources, the criminal can rapidly make a large amount of purchases before the consumer even comprehends what is happening. Credit card fraud is categorized as identity theft, identity assumption, or a fraud spree, depending on the particulars of the criminality.
  8. Insurance Fraud: Insurance fraud is committed every day by people who otherwise would not consider themselves to be lawbreakers. Incorrect or inflated insurance claims for automobile damages, health care expenditures, and homeowners or renters insurance are considered to be insurance fraud. They may be charged as crimes, depending on the circumstances and volume of the fraud.

Fraud Prevention and Warning Signs

To avoid becoming victims of fraud, people need to protect themselves by learning the warning signs of fraud: Check out America's Best Bookkeepers

  1. Phone calls in which the caller asks for money to be sent in exchange for an offer.
  2. Phone calls in which the caller asks for a social security number (even if they only request the last four digits).
  3. Phone calls in which the caller asks for personal information, including a bank account or credit card number.
  4. Receiving unsolicited mail or emails requesting the person send money with the threat that he may lose their credit cards or driver’s license if they do not obey.

Possibly the most significant personal policy to protect yourself against fraud is to never provide personal information over the phone, mail, or email. A respectable bill collector, bank, or loan company will never demand money upfront. If a person receives an offer or a demand for payment, they should look up the corporation’s contact information on their own, contact the establishment directly, and check with the Better Business Bureau in their state to ensure the company is authentic. When retailing an item of large value, an individual should also appeal a cash payment to avoid check or wire fraud.

Final Note

Keeping these warning signs in mind, an individual can prevent fraud by timely detection of fraudulent activities.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers