Helpful Tips For Preventing Fraud In The Workplace

Fraud is a major problem for American workplaces, affecting businesses both large and small. Not only that, fraud affects everyone in the company, from the business owner or CEO on down to the hourly employees. Fraud can reduce profits, delay payroll, prevent employees from getting bonuses, and cause stress for everyone at the company. Fortunately, there are steps that can be taken to greatly reduce the risk of fraud. If you are wondering what some of those steps are, read further. This article will serve as a handy guide to fraud prevention and reporting.

Fraud Prevention Starts With Good Screening

One of the best ways to prevent fraud is to screen employees thoroughly, before hiring them. To be sure, this will not prevent fraud entirely: there have been many instances of employees committing fraud, despite having an impeccable background. That said, there have also been instances of employees being hired, despite having a history of fraud, theft, and other criminal activities, simply because background checks were not performed! Such a situation reflects poorly on the employer, as well as the employee. For this reason, it is important to conduct thorough background checks on all potential employees, and to follow up with references.

The Importance Of Fraud Reporting

In the fight against fraud, your employees can be a huge help. Many cases of fraud were exposed or prevented because someone came forward and said something. This noble behavior should be encouraged within your company. This reporting cannot be a mere “he said, she said,” rather, there needs to be a comprehensive, standardized system of red flag reporting in place. The importance of such a system cannot be stressed enough. One recent study found that at companies where a fraud reporting system had been enacted, employees who were aware of fraudulent activity came forward to report that activity nearly 48% of the time, while at companies that did not have such a system, employees reported fraud only 28% of the time. If you are wondering how to set up such a program, contact a business consultant in your area.

Create A Culture That Encourages Honesty And Openness

The company culture can determine the success of fraud prevention and reporting efforts, at companies large and small. For one, if a culture of dishonesty flourishes – that is, if employees are encouraged to cut corners, disregard rules and regulations, and tell countless “white lies” in order to increase the bottom line – it should be no wonder that fraud will flourish as well. In order to prevent fraud, a culture of honesty and integrity should be evident from the top, down.

Likewise, if employees feel that management is unapproachable and will not listen to them, or (worse yet), will retaliate, then they are highly unlikely to report instances of fraud. It is important, therefore, to let employees know that they will be listened to, and that anything they say will be kept confidential. Cultivating this type of atmosphere will actually benefit your business across the board, in addition to helping with fraud reporting.