5 Tactical Approaches For Fraud Prevention

Elite hacker entering a room through a keyhole silhouette 3d illustration information security backdoor concept with turquoise digital background matrix

Many organizations and individual businessmen face fraud each year due to their employees or business partners. New entrepreneur start-ups and small businesses are more vulnerable.  Risk of fraud has increased due to the advancement of technology and progressive development of the world into a global village. The increased awareness of technological development and complex organizational structure requires the corporations to incorporate internal anti-fraud approaches to combat fraud. According to 2014 research reports by global nation organizations face 5 % loss due to fraud each year, in which 85 % of serious fraudulent cases were committed by internal employees. The organizations should develop multi layered fraud prevention strategies while keeping these statistics in view.

Eliminate all loop holes that facilitate employees by implementing these five fraud prevention strategies.

1. Corporate culture

Corporate culture defines procedures and policies which govern employees. The organizational structure such as a reporting system, the accountable person, segregation of duties, job responsibilities and limitations should be clearly defined.

Hire the right employee by investigating their past employment history and educational background. All employees should know the tactical approaches which exist in their organization to prevent fraud. A documented policy which defines fraud, its prevention and detection policies should be implemented after proper training of all employees. Any kind of leniency or flexibility in misconduct or suspicious activities should be avoided.  This ignorance will lead to violation of policies, indirectly encouraging employees to plan a fraud. The Zero tolerance policy of all kinds of fraud should be communicated to employees. They should also be aware of actions which would be taken in case of fraud.

2. Internal controls

Internal controls of systems and organizations defines the plans to prevent the company and its assets from any kind of fraud and theft. This system should be revised frequently to analyze its effectiveness. It should be regularly updated according to the new needs, development and advancements of a company. Internal controls should clearly define accountability and compliance.

Documentation is an integral part of an internal control system and the most important tactic for fraud prevention. All procedures and transactions should be documented to minimize fraud. Every expense should be approved and countersigned by a managerial level employee so that the validity of receipts and expenses can be ensured. Restrict all physical and technical approaches to documents and information.

3. An independent audit system

An independent audit team should be conducted for regular as well as surprise audits to check inventory and cash situations. Checking of vacation balances should be mandatory.

Annual and quarterly audits should be monitored by the audit committee. Results of an internal audit should also be validated by this team. 29% fraud cases are detected by audit teams, a report says. This team is well aware of risk factors for fraud and policies to prevent fraud. These also monitor the policies to be strictly followed to prevent the more risky procedures.

4. Effective reporting system to reduce fraud

An effective reporting system should be developed. All employees should know how and where to report any suspicious activity. There should be an anonymous reporting system to report fraudulent cases because many employees are hesitant and reluctant to disclose their identity while reporting others.

All employees should be aware of the fraud prevention and reporting systems, and honest ones are encouraged to report.  According to a report, 40% of fraud cases are detected by tips given by employees.

5. Hire a professional fraud prevention expert

Certified fraud examiners could be hired as a part of a prevention program of fraud.  They play a vital role in generating and implementing fraud policies. They provide consultancy against internal and control audit systems and detection of fraud.


Fraud in business can result in major financial loss, a huge waste of time and a ruined reputation. Implementation of multilayered fraud risk strategies leads to a successful strategic business corporate organization. Check out America's Best Bookkeepers

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.