Turning Fraud Prevention Into Success

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Fraud nowadays is more common than ever. Small businesses are in far more danger than larger ones. Many organizations have made policies, procedures, and documents to prevent and detect fraud. By adopting effective fraud prevention strategies, the risk of fraud can be reduced. The keys to a success story to prevent fraud are strict implementation of all written policies, making all positions accountable and answerable for their actions.

Internal controls of the organization should focus on preventive fraudulent cases. Understanding of the potential fraudsters’ mindsets is important while developing anti-fraud policies. The best practices to prevent fraud are discussed below:

Fraud prevention through a Board of directors

Many organizations have developed best practices, an analytical approach to safeguard their business and have attained revenue growth by preventing loss related to fraud. However, very few organizations use a board of directors to translate this into a success story.

Here are a few roles that a BOD can play to prevent fraud.

  • Hiring a new CEO
  • Resignation of four directors and hiring of three new
  • Hiring new member for investigating
  • Education and certification of all employees
  • Refining internal controls and overhauling code of conduct

Board members should be independent and “yes men” so that they can be effective enough to question management about reporting and decision-making processes and procedures.

Employee background and behavior

While hiring employees who are directly involved in cash handling, inventory management and have accessibility to sensitive customers, always check his or her background history, employment history, legal history and code of conduct.

Provide employee space and flexibility to share his or her views and problems with you so that you can have a clue of their personality and any behavioral changes can be easily detected. In some stressful domestic problems, many honest employees can lean towards fraud, especially if organization policies are lenient and flexible against violations and misconduct.

Keep an eye on your employees, develop anti-fraud tactics and educate employees about dangers, preventive measures and also provide them with practical advice to prevent fraud. Make them vigilant and inspire them to report any threat to organizational assets and information.

Keep detailed records

Record keeping of all transactions, inventory and in & out is an integral part of any fraud prevention solution program. Fraudsters try to damage receipts or make fake inventory and transaction reports. Complete and detailed record keeping systems should exist. This system should be free of loose holes. What cash is coming in and what is going out should be recorded and payment records should be kept. An accurate financial statement is an important part of internal controls.

Solid, detailed records of all supplies and distributions of inventory should be maintained. Purchase orders should match GRNS. No inventory should be kept without paper works. The record of donations and samples should also be maintained. Random and surprise audit of inventory should be done periodically so that inventory managers couldn’t find time to reconcile and present false inventory reports.

Back up data files

There should be an effective backup system for data. There is not a particular regulation for maintaining backup data as it is to be determined by the transaction volume. This backup data stored in off-site is used to identify fraud.

Other safeguards and checkups for fraud prevention

Other important safeguards used for fraud prevention include: Hire a team of certified fraud examiners. Use CCTV cameras. Restrict access to offices, registers, cabinets and storage areas. Use passwords and firewalls for computers. Listen to others i.e. contractors, vendors, and customers. They provide a clue and indicators of fraudulent cases.


Fraud in business may lead to loss of your business to the extent that it may not be able to recover. But, by adopting a few simple preventative strategies, you can turn your business into the perfect success story. Check out America's Best Bookkeepers

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