“That could never happen here! How would someone ever steal from our company? The in-house audit people will catch it if someone tries anything. My coworkers are like family! I can’t believe someone can do that!”
Does that sound familiar? Most of the small and mid-sized businesses are exposed to fraud happening compared to large organizations. It becomes even more complex when the management is filled with loopholes, and people take advantage of it.
In this article, we are going to discuss employee fraud prevention tactics in small and mid-sized firms. There are mainly three types of employee frauds that need attention- Data theft, Financial fraud, and Misuse of assets. Not every organization has the capital to spend on fraud prevention measures! Hence, you do not need to worry. Many monitoring tools by your side can let you detect and prevent such fraudulent practices from happening in your business.
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How much do you know about your employees?
Many business owners assume that the employees are loyal, work hard, and have the good interest of the organization in mind. Although this may be true for the most part, things happen beyond our control, and sometimes good people make bad decisions. If you look in the mirror at your organization and consider the so-called swindle triangle in your business may help you recognize areas where your business may be at risk. By scrutinizing and dissecting the behavioral traits of employees, you could be able to learn about potential fraudulent risks.
Generally, a fraud is more likely to occur in an organization if there is:
- Opportunity (insufficient controls),
- Rationalization (I deserve a raise, I’ll give it back, I’m just borrowing it, etc.)
- Stress (financial pressure, legal problems, problems at home).
Here are seven measures you can take to detect and prevent employee fraud-
Train Your Employees
Nowadays, it has grown considerably essential to train your employees to know about the warnings of fraud-prone areas in business. Employees are used to seeing the type of fraud that occurs when a credit card gets stolen, an identity is stripped, or there is a violation of information, not necessarily a trusted bookkeeper of 20 plus years skimming one thousand dollars a week for five years. In this case, make your employees aware of the fraud risk policies of your company. If you educate your employees, you may find that honest employees start asking questions when things look out of character, and they may assist in revealing any potential issues sooner.
Implement Internal Controls
Internal management control is the primary thing that should be planned, as it helps to track everything happening in your firm. Internal controls are implemented to safeguard company assets, ensure integrity, and deter fraud and theft. For this, segregating duties will help you in maintaining a healthy work environment. There are five main components of the internal control framework that you need to manage in your business and types of fraud prevention-
- Control Environment:
Make sure that you have a healthy work environment where employees have the confidence to work without any stress.
- Risk Management:
It’s a part of the business where you have to identify and control any errors or threats that may cause losses to your firm.
- Control activities:
If there are any fraud activities detected, you have to stop them immediately.
- Communication:
Communicate with your employees to prevent any mishaps or errors in your business.
- Monitoring:
Make use of the best workplace monitoring tools like EmpMonitor to manage internal control in your organization.
Hire Experts
To handle the legal consequences of your business, you can hire experts who can assist you in financial and legal matters. There are CPAs (Certified Public Accountant) and CFEs (Certified Fraud Examiner) services you can hire to take better control over any employee fraud actions. These experts can provide a wide array of services including, internal control audits, rhetorical analysis, an internal control symptomatic review, and other comprehensive consulting engagements to assist in fraud obstruction. So hire them and let them handle your business, and you can have time to do something else and not in the weeds laying down controls that you are not experienced at.
Make Sure Your Business Is Insured
Fraud is here to stay- ask your insurance provider. Are you insured for damages caused by scams, theft, or cybercrime? If not, you should ask your insurance provider what coverages are available. Business fraud can happen to anyone and can result in damages beyond money, including reliability, employee morale about the future, and loss of customers.
Improve Team Communication
Communication is the key to success, and it can surely help you reduce fraud happening in your business. With a collaborative team, you can propose better corporate culture to associate fair job practices. Nowadays, many organizations have an open door policy where employees can question their superiors/employers about suspicious activities. In such a case, management should encourage their employees to be more confident and expressive.
Keep A Close Check
After implementing the above employee fraud prevention methods, It is necessary to keep a check and follow all the step-by-step processes to prevent any fraudulent practices. Strengthen the monitoring policies in your company to check on any suspicious actions that may cause threats to your production. By performing these fraud prevention measures, you can improve work performance and productivity in your business.
Employee Fraud Prevention Software/Tools
According to the ACFE (Association of Certified Fraud Examiners) report, the best way to prevent such efforts is by making them more visible. Therefore, many businesses are deploying employee monitoring tools to keep a check on the employees that involve overall web monitoring. With employee monitoring, the management can detect the mistakes of their employees. And take preventive measures accordingly.
Here are the top 4 software options to pick from:
- EmpMonitor
- InterGuard
- ActivTrak
- Teramind
Wrapping Up
The world is getting more agile, people are getting smarter, and the efficiency of a single individual is growing. Taking fraud- mildly is what the individuals hacking into your system now are wishing. Eventually, it may come knocking at your door. These top 7 employee fraud prevention measures can be helpful and come in handy.
