How To Prevent Fraud In The Workplace

Fraud is a problem that can occur in nearly any American workplace. This is true for companies large and small. To make matters worse, fraud affects everyone in the company – from the business owner or CEO on down to the hourly employees. Fraud has many negative impacts on a company, including reduced profits, delayed payroll and increased stress for everyone at the company. That’s the bad news. The good news is that there are steps that can be taken to reduce the risk of fraud.

If you’re wondering how exactly you can reduce fraud in your company, continue reading. This article will serve as a handy guide to both report and help prevent instances of fraud.

Thorough Screening Is Of The Utmost Importance

In order to prevent fraud, it’s necessary to thoroughly screen employees before you hire them. Just be aware that this step will not prevent fraud completely, as there have been many instances of employees committing fraud even though they may have had an impeccable background. That being said, there have more often been cases where employees were hired, despite having a history of fraud, theft and other criminal activities, all because background checks were not done. Unfortunately, this situation reflects just as poorly on the employer as on the employee. To prevent this embarrassing and harmful situation from happening, it’s just good practice to conduct thorough background checks on all potential employees and to follow up with references.

Business Fraud | Internal Controls | Ohio CPA Firm — Internal controls are procedures that an organization sets up to safeguard its assets and financial reporting from fraud. Fraud does not discriminate – all organizations should have some type of internal controls in place no matter the size of the organization. What are you doing to protect your business from occupational fraud?

It Is Important To Report Fraud As Well

The battle against fraud can also be waged by your own employees. In many cases, fraud is exposed or prevented because an actual employee came forward and said something. This type of behavior should definitely be encouraged within your company. It’s recommended that you find an agency that can help you institute a reporting mechanism, or red flag reporting, that pertains to your particular state. Studies continue to find that in companies with a fraud reporting systems in place, employees who were aware of fraudulent activity came forward to make a report nearly 48% of the time, while at companies where a system was not in place, employees reported fraud only 28% of the time. This is a huge difference, one that can make or break your business.

Honesty and Transparency Should Be Encouraged Within Your Company

In large part, a company’s culture can determine whether efforts to report or prevent fraud are successful or not. This principle applies to companies large and small. In companies where a culture of dishonesty is the norm – for example, if employees are encouraged to frequently cut corners, disregard the rules and regulations the company has put in place (as well as codes of business ethics), or lie in order to increase the bottom line – it should not be any wonder that fraud is likely to flourish as well. In order to truly prevent fraud, a culture of honesty and transparency, as well as ethical conduct, should be evident throughout the company. Internal control studies can identify any weaknesses, helping you detect, eliminate, and prevent fraud while managing your company with reduced risk.