Unfortunately, this school of thought is wrong. The risk of employee fraud in small and mid-sized businesses (those with fewer than 100 employees) is much higher than it is in larger corporations. According to the Report to the Nations on Occupational Fraud and Abuse in 2018, the Association of Certified Fraud Examiners (ACFE) has proved that the median loss due to occupational fraud in small organizations is twice as much as those in larger ones.
The impact of employee fraud would be substantially more difficult to recover from for small and medium-sized businesses in comparison to larger companies. This makes it imperative that such business takes the possibility of employee fraud seriously by putting measures in place to reduce the chances of such an event.
Prevention is better than a cure. Don’t wait for fraud to destroy your business before implementing processes to prevent it. The best way of combating fraud is to employ a proactive approach in implementing and detecting possible causes of fraud before they happen. Here are some tips you can follow to minimize the risks of employee fraud crimes in your company:
You should never allow a single individual to control the accounting function in your company. If you have one person in charge of all of your accounting responsibilities, then you are creating a situation where you could be susceptible to employee fraud.
Depending on the size of your company, you may want to consider splitting up accounting tasks between multiple employees, or at least sharing accountability for the following tasks:
If segregation is out of the question, the business owner should check the bank statements on a monthly basis and review vendor payments periodically.
Consider hiring an external accounting organization to provide oversight and support to your internal staff. Not only will this reduce the likelihood of employee fraud, but it will also put your accounting department under tighter control. The new firm may make recommendations for improvements or launch some new accounting activities to increase your profits, too.
A simple background check can do wonders for pulling up the history of your employees. This should be done as standard in most industries, but if for some reason you aren’t already conducting background checks, then maybe it’s time to start.
Consider investing in fraud insurance to protect your business in the case of employee fraud. No matter how much you try to protect yourself, you still want to have insurance peace of mind if such an event ever were to take place.
Minimizing employee fraud in the working environment is the responsibility of every individual in an organization, but particularly those in leadership roles. Not only is it essential to assess the skills, qualifications, and background of any employees in the hiring process, but it’s also equally as important to assess their character and criminal background too.
No business is immune to employee fraud, so make sure you put measures in place to reduce the chance that your business will fall victim to such crimes.
About the Author: Douglas Parker handles content management and communications for Manshoory Law Group, APC. He has always had a special interest in the sphere of Law and Human Rights. Dedicating a lot of his free time to understanding the small details and specifics of these fields, Douglas enjoys exploring and analyzing them in his articles. His main goal is to make this sometimes complicated information available and transparent for everyone.