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How to Prevent, Deter and Detect Fraud in Your Business

"Fraud has a direct impact on your company's bottom line. It also threatens your company's hard earned reputation."

We have seen it all and we can help you become more savvy about preventing fraud and detecting it.

Outline

  1. What is Fraud?
  2. What are some warning signs of Fraud?
  3. What are examples of Fraud?
  4. How can you prevent Fraud?
  5. How can we help?

 

  1. What is Fraud?

    Fraud can take on many forms:

    • Stealing money or merchandise
    • Taking kickbacks or bribes from suppliers or customers
    • Providing false financial information on the company to the government, creditors or investors
    • Cheating on expense accounts
    • Claiming overtime when it is not due

    The above offenses are all "occupational fraud." There are four elements to occupational fraud:

    • The activity is clandestine
    • It violates the employee's duty of trust to the employer
    • It is committed for the purpose of direct or indirect financial gain
    • The employing organization loses assets, revenues or reserves

     

  2. What are some warning signs of Fraud?

    Big spenders: Employees who seems to be spending outside of their means probably are. One cause of this could be fraud.

    People with financial problems: Just like big spenders, people with financial problems may be more motivated to commit occupational fraud.

    Rule breakers: People who ignore company rules and regulations set a bad example and can trigger fraud throughout the company.

     

  3. What are examples of Fraud?

    Retail fraud: An employee working at the sales counter has been stealing sweaters for months.

    Bookkeeping fraud: Your longtime bookkeeper has been authorizing checks to herself and recording them as "consulting expenses."

    Purchasing fraud: Your buyer has been purchasing items with the company's money for his own side business.

    Expense fraud: Your leading salesperson has been expensing hotel stays and "client dinners" while on personal vacations.
     

     

  4. How can you prevent Fraud?

    Create and maintain a culture of honesty and high ethics. Set the tone at the top by setting achievable goals and expressing "zero tolerance" for unethical behavior. Also, train employees regularly regarding the company's values and code of conduct.

    Have strong system controls. Identify ways to increase security in your computer, record keeping and payment systems.

    Pay attention to the warning signs on the books. Create internal mechanisms that alert you to potential transgressions.

    Report irregularities. Create a system for employees to anonymously report illegal or unethical actions they have witnessed or suspect.

     

  5. How can we help?
    • Conduct a fraud audit
    • Conduct a systems audit
    • Help you evaluate and tighten internal controls
    • Work with you to monitor non-financial measures

In a recent study of fraud

small organizations (100 employees or fewer) actually suffer larger median losses from fraud than large organizations (with 10,000 plus employees.) In fact, small companies are over 100 times more vulnerable to fraud than their largest counterparts. However, our professionals can help you assess your risks and create safeguards.

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