How To Avoid Business Fraud

Jan 31, 2018 by

One of the biggest threats faced by organizations of all shapes and size is business fraud which can mostly be categorised under corruption, financial statement fraud and asset misappropriation. Research studies have revealed that fraud causes an organisation to lose 5% of its annual revenues, which can go a long way in reshaping the financial position of the company. Thus,the importance of fraud prevention in safeguarding the health of a company cannot be undermined. Business owners can follow the five precautionary steps mentioned below to prevent the occurrence of fraud in the workplace.

  • Build Up A Positive Working Scenario

A constructive working environment can be of considerable help in preventing theft and internal fraud. Employees need to feel that they are all a part of one big family. In this way, they shall adhere to the established policies wholeheartedly and work in the best interests of the company. Having open-door policies encourage free communication in between the management and employees. The policies of the company should not showcase any signs of bias or partiality towards a certain sect of employees. Everyone starting from the senior managers to the owners needs to be accountable for their own deeds.

  • Institute Internal Controls

Having a solid bunch of internal controls in place shall ensure the integrity and effectiveness of the firm’s operations. Division of labour and decentralization of responsibilities is of foremost importance in maintaining the organisation prowess. If a single employee is asked to look after everything starting from transaction recording to transaction processing, the chances of fraud get heightened.

  • Restricting Cash Transactions

Compared to the digital ones, cash transactions are much more vulnerable to theft and fraud. It becomes cumbersome to detect internal theft on cash usage. Mobile point of sale can monitor the activities and behaviour of employees as well as restrict fraud and internal theft in stark contrast to cash-based point of sale which cannot be of much help.

  • Imparting Education Amongst Employees

Employees need to be monitored closely to examine if they are conforming to the policies and procedures laid down. It is also essential to educate them about the internal control policies of the organization, especially the ones related to fraud prevention. Both written and verbal forms of communication can be availed of in propagating knowledge about internal controls. Providing annual training to the workforce can also be of great help as it will aid them in identifying frauds and standing up against the same. In many cases, the employees do not wish to take the risk of coming under the spotlight by whistle blowing. In such scenarios, anonymous reporting system can aid them in exposing violations without having to face the wrath of colleagues.

  • Setting Up A Trustworthy Workforce

Sincere employees easily oblige to company policies thus maintaining a progressive working environment. Currently, employers can conduct pre-employment check by speaking with the previous employers before recruitment. Such verifications aid in finding out about the civil history, criminal history and certificate validity of the prospective employees.

The defensive measures mentioned above can help in preventing occupational frauds which are taking the shape of a big nuisance in modern times. However, if you face any undesired situation, then you can contact the experts at http://lamkinelderlaw.com for aiding you in dealing with the gruelling litigation process.

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