How do you prevent fraud?

Business fraud is simply the intent or the act of misrepresentation - scammers lying about themselves or their actions and services - to cause a gain or loss. We can’t provide a single solution to prevent all business fraud, but the information below will help you identify the most common types and take action to protect yourself, your staff and your business.

1. Identify areas where your business is vulnerable to fraud.

Assume that the perpetrator can come from both inside and outside your business.

It can be possible from your employees as well as your customers, suppliers and partners.

2. Know your business.

You need to know the basics of your business so that you can realize immediately when something isn’t right. Have a through understanding of your products, services, employees, operations and target and legal obligations.

3. Know your employees.

You have to be able to observe the behavior and conditions of your employees.

If you notice someone who has a tendency to do wrong, you need to keep an eye out. Management is important not only to prevent fraud but also to improve business performance.

4. Know your customers and suppliers.

To spot any business request or transaction that looks wrong for that customer or supplier, you need to check the customer or supplier details you have on the file and search through online. It should be noted in advance that fraud can happen at anytime (eg. delivery time of goods or submitting fraudulent documents).

5. Take extra care against cyber-attacks and secure company’s asset

You need to protect technologically as cybercrime attacks can also occur. Be prepared to back up immediately if something goes wrong with the system. This includes laptops, computers, smartphones and intellectual property.

6. Understand your finances.

Understand the income and how money was spent for your business including payments and bank statements.

7. Develop an action plan.

While prevention is better than cure, it is important for you and your business to be prepared for the worst. To protect some losses to fraud, you need to have an action plan with the help of professionals or legal advice.

8. Implement Internal Control

90% of fraud cases are asset misappropriation as per case studies. Asset misappropriation can be defined as misused of company’s or clients’ assets for personal gain. It can be cash or noncash. For example, making false expense reimbursement claims and/or taking non-cash assets of the organization. To safeguard your company assets, implementation of internal controls is important in your organization.

9. Hire Trustworthy Experts

You may also hire trustworthy experts to set up all required control policies and procedures that will prevent and deduct the potential business fraud. Certified Fraud Examiners (CFE), Chartered Accountants (CA) and CPAs who are Certified in Fraud Forensics (CFF) can play all important roles in establishing antifraud policies and procedures.

As your trusted partner, we are Certified Fraud Examiner (CFE) and Chartered Accountant (CA). We are happy to assist you in implementation of internal control, fraud prevention policies & procedures, deduction of fraud, fraud examination & investigation.

Try your first step with Stratecx.