Fraud can occur within your organization. Actually, according to the Association of Certified Fraud Examiners, small businesses (with less than 100 employees) lose twice as much per scheme than their larger counterparts due to the lack of internal controls. Small non-profits suffer for the exact same reason.
Often times small business owners and small non-profits tend to have only one person they rely on for financial transactions. It is this circumstance that can solely weaken or decimate the financial foundation of the organization. According to the bi-annual report published by the ACFE, the Report to the Nations, internal control weaknesses are responsible for nearly half of all frauds. One internal control that the Report to the Nations highlights is that the longer an employee is with a company, the more they will steal.
For those in the industry of fighting fraud, the cases, stories, and news reports are constantly with filled with the same scenario… a trusted employee, a lack of internal controls, missing funds, and a company or organization financially hurt. The specifics change but the basics facts do not.
Not all frauds, after discovery, are referred to law enforcement. According to the report, the number one reason why is cited as fear of bad publicity. This fear is contradictory to preventing fraud. It should be publicized that the organization will not stand by and passively allow the fraud to occur without recourse.
There are ways for a business or organization to protect themselves. Some steps to reduce fraud include implementing controls specifically designed to reduce fraud. These controls include: installing a tip line for employees to report fraud, provide a reward for whistleblowers, employ a dedicated fraud department with certified fraud examiners, have a formal fraud risk assessment conducted, provide fraud training for executives and management, provide employees with an anti-fraud policy and code of conduct, and conduct surprise audits that are designed to specifically look for fraud.
The goal at Verity Financial Fraud Examiners is to lower fraud losses, provide quicker detection, and ultimately prevent fraud before it happens. Contact Verity for a fraud risk assessment and vulnerability report. We can help you protect your organization.
Posted by Dru Carney VP Investigations
ACFE. (2018). Report to the Nations. http://www.acfe.com/report-to-the-nations/2018/docs/2018-RTTN-Key-Findings.pdf