Fraud Prevention Strategies

Prevent Fraud - Complete Controller

Many organizations and individual business people face fraud yearly 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 technological advancement and the world’s progressive development 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 the global nation, organizations face a 5 % loss due to fraud each year, in which internal employees commit 85% of severe fraud cases. Organizations should develop multilayered fraud prevention strategies while keeping these statistics in view.

Eliminate all loopholes that facilitate employees by implementing these six fraud prevention strategies.

Corporate Culture

Corporate culture defines procedures and policies that govern employees. The organizational structure of reporting systems, the accountable person, their segregation of duties, job responsibilities, and limitations should be clearly defined.

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

Internal Controls

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

Documentation is an integral part of an internal control system and the most crucial 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 to ensure the validity of receipts and expenditures. Restrict all physical and technical approaches to documents and information.CorpNet. Start A New Business Now

An Independent Audit System

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

Annual and the audit committee should monitor quarterly audits. This team should also validate the results of any internal audit. Audit teams detect 29% of all fraud cases, a report says. This team is well aware of risk factors for Fraud and policies to prevent Fraud. They also monitor the policies to be strictly followed to avoid more risky procedures.

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. An anonymous reporting system should report fraudulent cases because many employees hesitate to disclose their identity while saying others.Complete Controller. America’s Bookkeeping Experts

All employees should be aware of fraud prevention and the company’s reporting system. And they should be encouraged to report anything they find suspicious. According to a report, 40% of fraud cases are detected by a tip given by employees.

Monitor and Check Vacation Balances

Checking vacation balances should be mandatory. Vacation provides a chance of Fraud in the business. Bookkeeping may be tampered with by the bookkeeper during vacations, or checks may be stolen during stressful times such as the holiday season.

Hire a Professional Fraud Prevention Expert 

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


Fraud in business can result in significant financial loss, wastage of time, and a ruined reputation. Implementation of multilayered fraud risk strategies leads to a successful strategic business corporate organization.

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