Top Tips for Preventing Fraud in Your Business

The Australian Institute of Criminology describes fraud as “dishonestly obtaining a benefit, or causing a loss, by deception or other means”.

Secrecy is the key to fraud. Rather than an outright theft, fraud is something that is usually carried out in secret with the intention to deceive.

Fraud can be a single large-scale criminal act, or it might be carried out on a smaller scale and go undetected for many years.

Types of fraud include:

  • Claims for time not worked or for reimbursement of non-work expenses.
  • Use of work credit cards for personal expenditures.
  • Redirection of payments.
  • Online scams and hoaxes.

Research shows not all fraudsters within an organisation are criminals, nor do they always set out to commit fraud. While there might be some serial offenders, a fraudster might be an employee who feels undervalued at work, or who is struggling financially and takes advantage of lax procedures.

4 steps towards reducing fraud

  1. Segregation of duties – for example, separating out duties around the processing of receipts and the banking, and creating dual signatories or authorisers for all financial transactions.
  2. Regular account reconciliations – if you only do bank reconciliations every few months for example, there is a higher potential for unauthorised transactions to go undetected. Account reconciliations should ideally be done weekly.
  3. IT policies and controls – this includes passwords, dual authentications, scans and firewalls to safeguard data, and staff vigilance regarding online scams.
  4. Fraud awareness training – training staff on how fraud can occur, and on how to detect, report and prevent it.

It’s also important to implement sound recruitment and employee management procedures in your business. This includes thorough background checks, clear job descriptions, fair renumeration, regular performance reviews, workplace training and opportunities for professional development.