Corporate fraud is something that has affected almost every business at one time or another. It is a sad price of doing business. Corporate fraud can be any fraud that is committed against a specific business. Cases of corporate fraud are complex, private, and can include financial scandals or evasions of fiscal responsibilities. It can also come in the form of theft of physical assets, confidential information, or cash. Also, misappropriate use of business accounts, fraud of payroll, extortion, credit, and banking-related frauds, specified insurance fraud, and much more.
Types of organizations affected by Corporate Fraud
Now the question at hand is how can we measure the extent of corporate fraud and what steps can we take to eradicate this obnoxious scam from our organizations? Everyone is facing this issue, and it doesn’t depend on the organization’s size, industry, net worth, or location. Fraud does not discriminate. You cannot plan to squelch white-collar crime without discouraging healthy business growth that benefits the consumer. The government vigorously tries to avoid fraud with different policies, rules, and techniques designed to help law enforcement detect schemes before they blow up.
According to recent studies by the American Institute of Certified Public Accountants (AICPA), small businesses are greater targets of fraud. Small and midsize companies undergo a bigger part of fraud damages than do larger companies. The reason is obvious; small companies don’t have the resources to put in place proper fraud prevention protocol. Also, even if implemented, the protocol is often taken lightly by company employees.
Fraud Prevention Program
Specialists estimate that businesses lose 5-6% of their yearly profits due to white-collar fraud. A complete fraud prevention program is required if you do not want to become a part of these statistics. This consists of three things:
- Preemptive prevention
It is the responsibility of the stake owners to give every employee a complete training on how to identify the signs and symptoms of a fake business con and how to report these scams efficiently. Even if someone in the business has recognized the fraud, they often hesitate to come forward because it may be hard for that individual to explain the situation, and they fear of losing their position in the company based on what they have found. The most important thing for a company owner to tell all employees is that they have their complete trust, rely on their actions, and that they should come forward without any hesitation in case they find something. Whether it is a small or large organization, employees are most likely to report suspicious activity when they have the essential knowledge to help the company as an integral part of the fraud prevention program. Almost 90% of the time, corporate frauds are committed within the organization so, while fraud avoidance efforts are designed to stop employee fraud, inspections of suspected fraud should discourage other employees from committing fraud.
Secondly, once the fraud has been identified, proper and thorough interrogation and an investigation is a must. Identifying and inspecting signs of fraudulent doings should never be overvalued or taken too superficially. All employers must remember the influence on the company’s reputation and internal atmosphere of setting the wrong person under exploration.
Thirdly, and the most important factor in a fraud prevention program is to carry out certain preventative measures to see the general picture and know the background of fraud, categories of fraud, and detection techniques applicable to fraud in a corporate setting. Decide what action should be penalized to the culprit or guilty party based on the results of the investigation. There should be a structured report according to the elements of proof for the relevant offenses. The action taken will certainly set an example in front of everyone in case of any future corporate mishaps.
The one sure thing for almost all business owners to know is that we can never completely eradicate fraud in our businesses. Still, we can take preventive measures and be more efficient with keeping a strict eye on all things related to corporate fraud by properly educating everyone working in the corporation.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service 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, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.