Why Every Business Needs to Practice Fraud Prevention

All businesses are vulnerable to fraud. Deceptive actions do not have to be big or newsworthy to be considered ‘fraud’ – it could be as simple as a staff member claiming for time not worked or non-existent expenses.

Fraud can be very costly to a business – not only financially, but also in terms of loss of trust and reduced morale. Research shows many offenders do not deliberately set out to commit fraud when they join an organisation, but may succumb to temptation where procedures are lax – especially if they are struggling financially or feeling inadequately remunerated.

Businesses of all sizes should take steps to prevent fraud. Here are some tips:

• Tight internal controls – such as dual authorisers for transactions and restricted access to cash and bank accounts.

• Regular bank / cash reconciliations – these help to quickly detect unusual or unauthorised transactions so they can be promptly investigated.

• Clear job descriptions – so that employees understand their roles and what is expected of them.

• Code of Conduct – signed by all staff when joining the organisation.

• Fraud detection methods – e.g. reporting procedures and regular internal / external audits.

• Insurance cover – even with tight security the risk is always present, so it’s important to have adequate financial protection (such as employee dishonesty insurance) in place.

Developing a positive workplace environment where staff feel secure and appropriately rewarded, and where the lines of communication are open, can help reduce fraud risk. When combined with tighter internal controls, these things can also help to make the business more efficient – so it’s a no-brainer really!