How To Protect Yourself From Occupational Fraud
The issue of occupational fraud affects all businesses, regardless of their size or industry. A report by the Association of Certified Fraud Examiners estimates that organizations lose 5% of their revenue annually to fraud. This is a huge amount of money and shows the importance of protecting your business and yourself against occupational fraud. This is defined as any fraudulent act committed by a partner or employee. This includes embezzlement and theft of intellectual properties, as well as financial statement fraud. The consequences of occupational fraud are devastating for your business. They can include loss of revenue, reputational damage, and legal consequences.
There are many steps you can follow to protect yourself against occupational fraud. Here are a few tips to help you get started.
1. Background checks for employees and business partners
Conducting thorough background checks of anyone who is going to work for your company or join it will help you to identify any past issues with fraud or criminal activity. You can identify past frauds or criminal activities. Verify employment history and references in order to confirm that the person who you are hiring is indeed who they claim to be.
2. Implement internal controls
Policies and procedures are put in place for the purpose of preventing and detecting occupational fraud. Internal controls can include dual authorizations for financial transactions and separation of duties. Implementing these controls will reduce fraud risk and help you catch suspicious activity as early as possible.
3. Regularly train your staff
To prevent occupational fraud, it is important to educate your employees. All employees should receive regular training about what fraud is, what it looks like, and what they can do if there’s a suspicion. This will help to create a culture that is open and accountable in your company.
4. Monitor financial activity
It is important to monitor financial activity regularly in order to detect and prevent occupational fraud. To ensure that everything is in order, you should review your financial statements, bank statement, and other records regularly. Investigate immediately any red flags or discrepancies you may notice.
5. Encourage whistleblowers
Encourage your employees to report suspicions of fraud. This will help you detect it earlier. Make sure that your company has an established whistleblower policy and employees are comfortable in reporting concerns. You should ensure that any reports made are investigated and taken seriously.
Protecting yourself against occupational fraud requires an active approach. You can protect your business by reducing the risk of fraud through thorough background checks, regular training, implementation of internal controls, monitoring financial activities, and encouraging whistleblowing. It’s better to be safe when it comes occupational fraud.