Author: Youth 2 Youth

Unfortunately, corporate fraud -
fraud in business of any size - is a
big problem in Australia. In fact, the
Insurance Council of Australia has
suggested that (on average)
companies lose 6% of gross revenues
to fraud, and KPMG's 1996 survey
suggested the amount could be up
to $16 billion for Australia, finding that
60% of businesses suffered from fraud
and 37% from computer fraud. The
situation may be even worse considering
most fraud is undetected or unreported!

Small business is especially susceptible to fraud because there aren't often detection procedures in place. Employees stealing stationery, making excessive personal telephone calls and surfing the net may not be easily caught in a small business. How often do you read your employees' emails? The dilemma is that in small business we can often operate in an informal environment where relationships matter. Often you want to be able to trust (and be friends with) your colleagues.

There are three main types of fraud:

Skimming: stealing funds before they reach or are recorded by the business.

Larceny: the theft of property, funds, intellectual or trade secrets that have reached the business.

Fraudulent Disbursements: through tampering with cheques, the payroll, the cash register or by altering/manipulating expense records.

Tips:

Develop a fraud policy and make sure all employees are aware of it, educate employees about what fraud is, and enforce a full repayment policy - don't rely on insurance to cover people caught. By establishing a fraud policy you make it formally clear to your employees what you expect. Reinforce the policy by leading by example.

Don't trust too many people with keys, cash, safe custody, important records or access to these. It's also a good idea to keep a record or register of physical assets like technology items (cameras, computers, scanners, disk drives, etc). Check the list off regularly.

Be alert warning signals such as signed blank cheques, low and/or declining employee morale, employees who refuse to take leave or have resigned abruptly for no reason, revengeful employees (or dismissed employees), employees working from home, sharing of security passwords or access information. Monitor the activity of cleaning and security personnel.

More information:

You can hire a detective to investigate fraud in your organisation, just search the net. You may also want to search government web sites or contact their departments for information on corporate fraud prevention. The Australian Institute of Criminology also has some useful research papers that you may find interesting at www.aic.gov.au.

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