You may think that you have recruited the most loyal staff dedicated to the company’s growth and progress. While this can be true to some extent, your business is still vulnerable to fraudulent actions by so-called loyal workers. These betrayals from employees’ manifests in myriad ways, including the following:
- Corruption — Extortion, conflict of interest, bribery, blackmail, or any other conduct that deviates from their duties and manipulates company deals to their advantage.
- Asset Misappropriation — Stealing money, claiming fraudulently reimbursed expenditures, and other asset theft and exploitation actions.
- Financial Statement — Tampering with the figures in a company’s financial report, such as disguised debts, exaggerated assets, phony revenues, and such things.
As a result, you need to safeguard your company from employee-related crimes as a business owner. Otherwise, you will not only lose money, but you may also incur a fine or, even worse, suffer jail time. Yes, this might happen as a result of your workers manipulating sensitive financial data. However, you can save yourself and your business all the misery with little prevention and carefulness. Here are some strategies to prevent corporate fraud. Let’s get started.
Be Prepared
To be honest, even if you’re overly vigilant, careful, and preventive, there’s a chance you’ll miss some suspicious behavior. Such ignorance might result in serious, irrevocable consequences. Hence, your priority is to prepare for such scenarios if they happen. This entails having legal professionals who can back you up immediately, whether to sue an employee or save yourself the criminal tag for the blunders done by them. The following are the two most essential specialists you will require:
- First of all, you will need a corporate lawyer to look after all the legal and external matters. This helps early detection of any suspicious activity and thus saves your business from possible crime.
- You will also need someone to become a bail bondsman for you if you fail to prevent the crime. This implies that if you are arrested, even though there is no mistake on your part, the professional will bail you out with a guarantee that you will appear in court. You won’t have to spend time in jail and will have ample time to clear your name.
Keep Tabs on Your Employees
First and foremost, before hiring, make sure you conduct a background check on the candidate. It’s essential if you’re employing someone to handle money matters. Analyze your workers’ behavior and check for any deceptive traits. Employees will sometimes strive to get into your good graces to assign them responsibilities that they can take advantage of. As a result, be sure that whomever you delegate tasks to is trustworthy and reputable. You should make an effort to get to know your staff personally so that you may spot abnormal behavior early on.
Monitor Banking and Credit Card Activities
Ensure your management monitors account activities and bank statements regularly. It is crucial for office paper statements to be aligned with actual business activities and bank records. There should not be any missing checks, missing entry or unknown payments done. Besides, do not disclose credit card info to anyone and indulge in online or offline secure baking transactions. Also, make it a habit to keep separate personal and business financial activities to avoid any confusion or blunder.
Internal Control
Developing a robust internal control system is an excellent way to avoid fraud in your company. Internal control consists of the following practices:
- Correct documentation of all the processes and transactions
- Restriction to all the sensitive data, documents, financial reports, and information
- Every reimbursement and overtime pay must be approved and signed by at least three authorities for validation purposes
- Assigning at least two accountants to undertake bookkeeping duties alternately to ensure that fraud does not go undetected
However, to guarantee effective implementation, you must periodically review, revise, and update the process.
Appointing Auditors
Auditors are well-versed in the risk factors and legislation related to fraud. They are pretty stringent about verifying the conclusions of internal audits. It is advisable to assign them to audit cash, inventory, refunds, and other accounting activities. In addition, they conduct non-scheduled audits regularly so that fraudsters lurking in the firm are not alerted and disguise their wrongdoings. This is the most reliable method of detecting frauds and other irregularities in the business.
Encourage Fraud Reporting
Ask your employees to report any suspicious or dubious conduct as soon as it comes to their attention. If they are hesitant or afraid to speak, set up an anonymous reporting method. Also, praise the employee for being honest and acting in the best interests of the firm. This way, more and more individuals will be motivated to report any irregularities. Make it clear to your staff that fraud will not be tolerated.
Since you don’t know how the criminal mind works, there are no tried and established ways for eliminating fraud. If they are determined to do the wrongdoings, they will do it anyhow. As a result, it is only reasonable to prepare for the worse while implementing numerous measures to avoid blunders.
