How to Prevent, Deter and Detect Fraud in Your Business

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.

Overview:

• What is Fraud?
• What are some warning signs of Fraud?
• What are examples of Fraud?
• How can you prevent Fraud?
• How can we help?

 

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

How to detect fraud in business?

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

How to prevent fraud in business?

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 fraud examples in business.
Prevent business expense fraud: Your leading salesperson has been expensing hotel stays and “client dinners” while on personal vacations.

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.

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.

 

We hope you found this article about “How to Prevent, Deter and Detect Fraud in Your Business” helpful.  If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page  or our website at www.GROCO.com.  Unfortunately, we no longer give advice to other tax professionals gratis.

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Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com.  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.

Alan L. Olsen, CPA, Wikipedia Bio

 

 

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