Tactical Approaches for Fraud Prevention

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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. The risk of fraud has increased due to the advancement of technology and the progressive development of the world into a global village. The increased awareness of technological development and complex organizational structure requires corporations to incorporate internal anti-fraud approaches to combat fraud. According to 2014 research reports by Global Nation, organizations face a 5% loss due to fraud each year, in which internal employees commit 85% of serious fraud cases. Organizations should develop multi-layered fraud prevention strategies while keeping these statistics in view.

Eliminate all loopholes that help employees by implementing these five fraud prevention strategies.

Business Culture LastPass – Family or Org Password Vault

Business culture defines policies that govern employees. The company structure, such as a reporting system, the responsible person, separation of duties, job duties, and limits, should be defined.

Hire the right employee by studying their past employment history and scholastic background. All employees should know the tactical approaches that exist in their business to prevent fraud. A documented policy that 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 questionable activities should be avoided.  This ignorance will lead to a violation of policies, indirectly encouraging employees to plan fraud. The zero-tolerance policy for all kinds of fraud should be communicated to employees. They should also be aware of actions to take in case of fraud.

Internal Controls

Internal controls of systems and organizations define the plans to prevent the company and its assets from any kind of fraud and theft. This system should be revised often to evaluate its value. It should be regularly updated according to the new needs, growth, and improvements of a company. Internal controls should clearly define responsibility and compliance. ADP. Payroll – HR – Benefits

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.

An Independent Audit System

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

Annual and the audit committee should monitor quarterly audits. This team should also validate the results of an internal audit. Audit teams detect 29% of fraud cases, 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 avoid riskier procedures.

Effective Reporting System to Reduce Fraud Cubicle to Cloud virtual business

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.

Hire a Professional Fraud Prevention Expert

Certified fraud examiners could be hired as a part of a prevention program for fraud.  They play a vital role in generating and implementing fraud policies. They provide consultation 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. The application of meaningful fraud risk strategies leads to a successful strategic business corporate organization.

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