Small businesses without strong internal controls of money and paperwork are the most vulnerable to employee fraud. Don’t wait for a fraud to occur. It is essential to be proactive and preventative and put processes in place. Below are some tips for small business owners to reduce the risk of loss due to employee fraud.
Educate yourself – Knowledge is power. The first step in protecting your small business against fraud is to inform yourself of what types of fraud may target your company.
Make your staff aware – Make the staff aware of how your company views issues of fraudulent activities by writing it down in a company policy booklet and making sure staff members are knowledgeable.
Don’t depend solely on external audits – External audits are usually performed once per year and months after the year ends. Even if the audit uncovers fraudulent activity, it may have been occurring for 12 months or longer before being discovered.
Segregate accounting duties – Avoid allowing one individual to control accounting duties, rather segregate accounting duties in key areas instead. These could include the following:
-Recording and processing transactions
-Sending out invoices
Ensure accounting oversight – Hire an outsourced accounting firm to provide oversight, support and possibly management of the in-house staff. They will start by reviewing your current accounting controls, workflows, and processes to make recommendations for improvements, implementing best practices, or even take on some of the accounting activities.
Do your homework when hiring new staff – When searching for a new employee or an external contractor, you need to do your homework so you know exactly who you’re hiring. Taking the time to do thorough reference checks is critical for both employees and contractors.
Enable Whistle Blowing – Having systems in place that enable employees to anonymously report tips are essential to dealing with fraud in your business before it gets out of hand.
If you are the victim of employee fraud, you may lose significant amounts of money and, in some cases, your good name. A qualified, experienced investigator such as Uphando can assist you, get in-touch with us today!