Preventing fraud at your organization

Fraud takes many shapes and forms, among them corporate fraud, consumer fraud, tax fraud, identity theft, and many others. According to ACFE (Association of Certified Fraud Examiners), organizations worldwide lose an estimated 5 percent of their annual revenues to fraud, costing the world $3.7 trillion each year.
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International Fraud Awareness Week is a global movement to minimize the impact of fraud through awareness and education. 

A single instance of fraud can be devastating, but with some basic steps, organizations can lessen their vulnerability.

• Be proactive. Adopt a code of ethics for management and employees. Evaluate internal controls for effectiveness and identify areas of the business that may be vulnerable.
• Establish hiring procedures. When hiring employees, conduct thorough background investigations. Check educational, credit, and employment history (as permitted by law), as well as references.
• Train employees in fraud prevention. Do employees know the warning signs of fraud? Ensure employees know basic fraud prevention techniques.
• Implement a fraud hotline. Fraud is still most likely to be detected by a top. Providing an anonymous reporting system for your employees, contractors, and clients will help uncover more fraud.
• Increase the perception of detection. Communicate regularly to employees about anti-fraud policies, ways to report suspicions of misconduct, and the potential consequences (including termination and prosecution) of fraudulent behavior.

The most cost-effective way to limit fraud losses is to prevent fraud from happening in the first place.  The ACFE created this checklist to help organizations test the effectiveness of your fraud prevention measures:

• Is ongoing anti-fraud training provided to all employees of your organization?
• Is an effective fraud reporting mechanism in place?
• Is possible fraudulent conduct aggressively sought out, rather than dealt with passively?
• Is the tone at the top one of honesty and integrity?
• Are fraud risk assessments performed to identify the organization’s vulnerabilities to fraud proactively?
• Are strong anti-fraud controls in place and operating effectively?
• Does the internal audit department, if present, have adequate resources and authority to operate effectively and without undue influence from management?
• Are employee support programs in place?
• Is an open-door policy in place that allows employees to speak freely about pressures?
• Are regular anonymous surveys conducted to assess employee morale?

​For more information about Fraud Awareness Week, as well as helpful resources, visit fraudweek.com.