Every business is at risk for fraud. Even with proper internal controls and an established code of ethics, you may still find your business left open to fraudulent behavior. It’s important to know your company’s high-risk areas, so your resources can be put to the best use. If you are looking for a fast, affordable way to gauge your company’s unique risk, a fraud prevention check-up could be the answer.
As you might expect, this check-up measures the health of your business as it relates to fraud prevention, and it can alert you to potential dangers. It reveals your most problematic areas and provides a direction moving forward. A fraud check-up is like putting a finger on the pulse of your company – giving you the opportunity to celebrate successes and close security gaps. It is one of the first steps in conducting a company-wide fraud risk assessment.
Although any area can be vulnerable to fraud, it most commonly lurks in financial and inventory departments because those are the places least likely to have segregated responsibilities. Activities like check tampering and fraudulent billing can add up to large losses; in fact, it’s estimated that businesses with fewer than 100 employees experience a median fraud loss of $150,000 each year. A complete fraud check-up catches these systemic losses.
This check-up should be viewed as a collaboration with your fraud prevention team: legal counsel, Certified Fraud Examiners, senior management, and employees from other facets of the business who may provide valuable insight. Building this team upfront will prove invaluable throughout your ongoing fraud prevention efforts.
Clear Benefits of a Fraud Check-Up
- Save Your Business Money
The Association of Certified Fraud Examiners (ACFE) estimates that most small businesses lose at least five percent of their revenue to fraud each year. Even slightly reducing that percentage saves your business thousands of dollars. Being proactive is the best way to ensure your company’s continued success.
- Protect Your Reputation
A company that identifies risks and fixes them is in a far better situation than a company that misses that opportunity and then suffers a major fraud crisis. One unfortunate incident could destroy confidence with investors, regulators, auditors, and the public at-large. It is imperative to detect and deter fraud at all levels. Your company’s integrity is paramount.
- Establish a Relationship with Fraud Experts
By conducting a fraud prevention check-up, your business develops a working relationship with legal counsel and your Certified Fraud Examiners. These professionals can help guide the process, and even more importantly, be ready to combat fraud within if it is suspected in the future.
How to Get Started
To get started with your company’s fraud check-up, you may want to look through a document published by the ACFE. It discusses seven key areas of fraud prevention, and like a quiz in a magazine, it will give you a score regarding your business’ fraud prevention performance. Anything less than 100 points means your business has an opportunity to improve those efforts.
This assessment should be conducted with experts to protect your legal rights, and we recommend that it only be taken when you are ready to safeguard your business against fraud. Our professionals can help your business with this check-up and an overall fraud management plan. Contact us with questions.