Blow Your Fraud Prevention Program Completely Out Of The Park!
Why wait for fraud to take your company down? Give your fraud prevention program everything you’ve got… today!
It may be fraud month, but fraud prevention shouldn’t be limited to a period of time during the year.
Just because an association claims March 2016 is fraud month, shouldn’t drive a company’s sudden interest in taking a look at their fraud prevention policy… then shelving the policy until another event deems it important. An anti-fraud policy should be an on-going piece of work warranting constant attention.
Fraud can strike when you least expect it. And it will leaving you wondering what the heck just happened!?
So it’s time to blow your fraud prevention program out of the park!
A tip is the #1 fraud detection method
More fraud is detected by anonymous employee tips than by any other means. While it is important to continue to make use of different fraud deterrent methods such as external audits, separation of duties, and fraud awareness training, the most important tool an organization can implement is a confidential reporting hotline. A hotline is simple, providing an immediate means of communication and offers support and encouragement to employees.
33% of all business failures or bankruptcies are due to theft and fraud
Small business owners need to be aware of this. Smaller firms do not have the means or sophistication to implement strong internal controls, so the extent of their losses can be devastating for them. Because of this fact, it is even more imperative for smaller operators to have a hotline set up to ensure they can gain access to information earlier to mitigate any potential losses.
43% of all private companies have experienced fraud
The other 57%? Their time will come. While public companies are mandated to have a whistleblower system in place and even more non-profits are implementing these systems as a way to protect reputational and financial risk, private companies who believe they don’t need these systems are setting themselves up for potential disaster. To be naive and think it won’t happen because you know your team or because everyone has worked together for a long time, is neither strategic nor logical. Most fraud is conducted by long-term employees who have access to accounting, operations, sales or manufacturing. Private companies need to ensure they put internal controls in place.
Fraud typically lasts for 18 months before detection
Imagine 18 months for someone to continually bleed a company because nobody was able to report what they knew or saw. It can be devastating and at times non-recoverable for many businesses. The more internal controls a company has in place, the more quickly fraud will be discovered. Employee training, management’s commitment to a whistleblower policy and anti-retaliation practices are key to ensuring staff feels confident about coming forward to report wrongdoing sooner.
Small businesses are very vulnerable to fraud
Fraud costs small business a median loss of $155,000, according to the ACFE. Because small businesses are usually focused on the day-to-day operations, strategic planning can often get pushed to another day. Small businesses don’t have the means to implement vast internal controls, so instituting small measures to begin with is a good place to start. Again, setting up a hotline is easy, cost-effective and an instant way to gain access to information that could save your business.
49% of victim organizations do not recover their losses
Almost half of all victim organizations discover their losses long after they have been spent. Studies show that the majority of business fraud does not go into investment properties or other such recoverable items. Rather the perpetrators used it to support lavish lifestyle enhancements and spending, gambling or other addictions. And that’s it – the money is gone and good luck recovering it. This statistic is especially concerning as again, with no opportunity to recover the missing funds, 33% of businesses that experience fraud, ultimately fail.
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