How To Investigate Fraud

Investigate Fraud - Complete Controller

Many organizations and business owners face fraud each year due to their employees or business partners. New entrepreneur startups 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 developments and complex organizational structure requires corporations to incorporate internal anti-fraud approaches to combat fraud. According to global nation research reports, organizations face a 5 % loss due to fraud each year in which internal employees committed 85% of serious fraud cases. Organizations should develop multi-layered fraud prevention strategies while keeping these statistics in view. Check out America's Best Bookkeepers

Organizations and businesses should do the following ten things when they suspect fraud.

  1. Be Calm and Don’t Panic

Fraud is scary, and you will likely want to panic and react abruptly when you suspect fraud in your organization. You may terminate the fraudster on the spot or meet them head-on for confrontation. But these are harmful rather than good for the organization. Don’t react when you are emotional or angry. Prepare a plan, investigate, and do what is beneficial for the organization. Make strategies and policies to handle fraud before it happens.

  1. React Logically

It is not preferable to overreact or have no reaction at all to a suspect. If you don’t react and take it easy, the perpetrator will think they are free to do anything. Ignorant behavior towards fraud will worsen, and the perpetrator commits fraud without any fear of consequences. Always take action when you suspect the fraud but react logically.

  1. Be Careful

If you suspect fraud, don’t declare it until you have evidence. If you react without evidence, the fraudsters become alert. The fraudster will try to hide and destroy evidence if they know they are being exposed and you are keeping an eye on them. After suspecting something is wrong, could you not make it obvious? Investigate carefully. Otherwise, you will not be able to get any evidence. Check out America's Best Bookkeepers

  1. Back up Financial Data

Always maintain backup data of your organization’s financial dealings. Save on hard copies or hard drives. Get a copy of a hard drive of your suspect discreetly. Preserve all records of transactions, emails, payroll, and bookkeeping. Perpetrators often utilize this information, especially bookkeeping records, to commit fraud.

  1. Rehiring

Be mindful and prepare for hiring new personnel. Termination is the minimum consequence of fraud detection. Managers and executives are often so involved in the actual fraud that filling the new position can be challenging. Prepare yourself for such challenges.

  1. Defend your Reputation

Fraud damages the organization’s image and reputation in front of the public, customers, partners, and donors. Try to react calmly and defend your reputation. Resume the trust of partners and customers by assuring them that the organization has taken corrective measures.

  1. Don’t Save Money

Financial loss due to fraud is recoverable, but the reputation is not recoverable. Hire a certified fraud examiner to make policies for fraud prevention and detection. Your organization may try to save money by not hiring a certified fraud examiner but will suffer a lot after an incident of fraud. Realize that money is not everything. The thing that matters more is the hard-earned reputation, which can easily be damaged by fraud. Check out America's Best Bookkeepers

  1. Set an Example

Set an example by handling fraudsters with tight hands. Otherwise, you may encourage others to commit fraud in the future. The penalties recommended after fraud are a civil lawsuit, termination, and criminal prosecution. Impose all three penalties severely, if possible. The employees will see zero tolerance for fraud in your organization and face severe consequences if they go there.

  1. Get Help

Don’t try to handle fraud on your own because it involves accounting and legal issues. Call a certified fraud examiner for help. They know where to get evidence and how to explain it to the legal system.

  1.  Make Positive Changes

Learn from an incident of fraud and prepare the policy to detect and prevent fraud in the future. It is not always possible to catch it before it happening. However, you can make changes both ahead of it or after it occurs. The key is awareness.


Fraud in business can result in major financial loss, wastage of time, and a ruined reputation. Fraud should be handled strictly when suspected. Fraud prevention is ideal, but the key is to use investigative skills to find and handle fraud.

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