Fraud is an all-too-common occurrence in businesses of all types and sizes across the United States. The numerous forms of fraud include the manipulation of financial statements, the misappropriation of company assets, the skimming of cash and the theft of intellectual property and trade secrets to name just a few.
The consequences of any form of fraud can be devastating for a company — according to a 2016 study conducted by the Association of Certified Fraud Examiners, the median fraud loss per individual case is $150,000.
The Difficulty of Identifying Fraud in Your Business
In many cases, business owners are not aware of fraud until it’s too late, and hundreds, or even millions, of dollars are missing. Fraud is often perpetrated over a period of months or perhaps years by trusted employees who have access to critical information.
In addition to the financial ramifications, fraud can cause irreparable damage to a company’s reputation and create a sense of mistrust that permeates the entire organization.
Steps to Take If You Suspect Fraud
While your initial reaction to a fraud discovery may be to confront or terminate the individuals(s), this can actually do more harm than good — if you don’t have clear proof, you could face a harassment or wrongful termination lawsuit. Instead, consult with your legal/financial team to implement a thorough, discreet investigation and build a solid case against the perpetrator. If you do not have the internal resources to conduct an investigation, consider enlisting the services of a certified fraud examiner.
If the investigation provides clear evidence of fraud, you’ll need to take the appropriate action. Depending on the circumstances and your organization’s policies, this can range from termination to reporting the incident to law enforcement.
Preventing Fraud in the Workplace
Taking the following steps to prevent fraud in your business can significantly reduce the likelihood of a disastrous situation:
- Conduct regular audits – Signs of fraud are often discovered during a routine review of financial records. Make a practice of conducting monthly audits and personally examining the results.
- Use a system of checks and balances – Relying on a single person to perform/manage financial transactions increases your vulnerability to fraud. Implementing a series of checks and balances where individuals review the work of others provides a built-in fraud protection.
- Monitor payroll closely – If your organization experiences high employee turnover, monitor your payroll department to ensure the wages of terminated employees aren’t being “misapplied.”
- Place surveillance cameras in high-risk areas – Placing security cameras in areas where cash/financial transactions occur minimize your fraud risk. Recorded footage from cameras can also provide evidence in suspected fraud cases. Even a visible “dummy” camera can serve as an effective fraud deterrent, as employees will believe someone is watching them.
Contact Titan Alarm for Your Business Security Needs in Phoenix, AZ
As a leading commercial security solutions provider in the Phoenix area, Titan Alarm can help you design and implement a state-of-the-art security system that can help to prevent fraud and other threats to your business. Contact us to schedule a no-obligation consultation today.
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Updated by Titan Alarm on November 2, 2018.
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