Great Tips to Protect Your Business from Fraud

With the increasing greed among people, the chances of committing fraud have increased manifold despite laying down various codes of conduct spelling out the repercussions for resorting to an unethical act. Due to fraud, businesses tend to lose their hard-earned money. As a matter of fact, fraud is an intentional act. A person stating a fact that they know is not true (fraud of commission) or a situation where a person conceals important information or doesn’t disclose it (fraud of omission) are both punishable acts and involve imposing heavy penalties on the accused.

Being an owner, it is important to be proactive and protect your business by taking precautionary measures rather than playing a blame game later. Have a look at some tips to help you in protecting your business against all frauds- Segregation of DutiesInn a small organization, a sole person would be seen wearing many hats performing multiple tasks, and invested in many aspects of the business. Instead, it is always advisable to spend on extra resources, if possible, and have a separate set of people managing different tasks. Each of them has proper records that can be used for tallying the accounts and finding a loophole right at its beginning.

Sufficient Knowledge

If not an expert, a business owner should at least have basic knowledge of the types of fraud that an organization encounters quite often. Some of them are-

Strict Vigilance

As the owner of the business, it is your responsibility to review the activities of the employees and the financial records of your organization. Have a rough estimation of the numbers with regards to sales and expenses. Question the things that seem strange or suspicious and actively follow up with your employees to get answers. For instance, if you have heard about the Ronald Rutman Frauds case – being a personal CA of the company, he committed all the frauds under the radar without any suspicion. It could have been avoided if strict vigilance had been there.

Business

Regular Audits

It is important to protect your business by setting up a surveillance system and then monitoring it frequently. Conducting internal audits is one practice that can help in detecting financial frauds and tracing the violator. Turning a blind eye to suspicious activities or not reviewing the accounts payable, invoice, etc., periodically could incur huge losses, and at worst, lead to a business shut down.

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