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How to prevent crime in your business
How to Prevent Fraud in Your Business
Crime against businesses is on the rise and is causing so much concern that the Government is undertaking research into the subject for the first time in eight years. And it is not just a problem for big companies - small and medium businesses are often at even greater risk, mainly because of a lack of awareness.
The problem is far more widespread than many realise. Fifty-eight per cent of firms reported being victims of crime in a survey carried out by the British Chambers of Commerce last year - and businesses were twice as likely as individuals to be victims. The cost to British business is estimated to be �19bn year including the cost of theft and vandalism.
The most common type of fraud is perpetrated by employees and former employees and affect profit and loss by overstating expenses or understating income. So what steps can you take to prevent fraud in your business?
Firstly, look out for the warning signs - these include changes in cashflow patterns, stock shrinkage, variations in accounting ratios and customer complaints. Then act to prevent fraud. Prepare a simple, focused fraud-prevention plan and implement it. Your plan should include procedures for managing the prevention, detection, investigation and prosecution of fraud.
Introduce checks - including stock checks, bank reconciliations, creditor checks and pre-employment screening - to minimise the risk of crimes going undetected. There are independent security consultants who can advise you on the particular risks your company faces and the measures you should implement.
Make sure all employees and new recruits know your company's policy on fraud. This policy should be spelt out clearly during the recruitment process. Vet applicants carefully and make fraud prevention and detection issues part of your induction and training. Provide all new employees with a copy of your fraud policy statement.
Make it as simple as possible for employees to report any suspected fraud by establishing clear reporting lines. You could set up a fraud hotline. Reassure staff that all reports will be treated confidentially.
Review your fraud-prevention policy regularly and make sure it is being strictly followed. Remember that your business is particularly vulnerable during periods of rapid expansion or change. With the cost of crime rising rapidly, you can't afford to ignore the risks.