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What can businesses do to avoid being victims of fraud?

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What can businesses do to avoid being victims of fraud?

Business fraud is a significant issue faced by organisations and stores of all sizes. To prevent fraud, it's important to understand the risks, identify schemes that could put your organisation at risk and implement policies to mitigate those risks. It is imperative to be proactive when trying to prevent fraud in organisations. While there are many types of fraud, the most common are asset misappropriation, financial statement fraud, and corruption. The majority of these fraud types are internal. This is when the Financial Fraud Investigator could be of good use. As a result, it is recommended that all business owners implement these five precautionary measures to prevent fraud in their organisations.

  • Know Your Employees

One of the most effective fraud deterrents is to raise the perception of detection. Make it clear to employees that dishonesty will be punished. When employees believe their wrongdoing will go unnoticed and unpunished, they are more likely to commit fraud. Hiring trustworthy employees is one of every company's top priorities. It is, however, easier said than done. Sincere employees cooperate better with company policies and contribute to a positive work environment. As a result, when hiring employees, one must conduct a thorough pre-employment background check and speak with previous employers to conduct a character check.

  • Make Employees Aware/Set Up Reporting System

In order to prevent fraud, it's important that employees are aware of what the risks are and how they can help minimise them. This means that you need to set up an internal reporting system so that employees feel empowered to report any suspicious behaviour or activity.

Financial Fraud data

It's also important that your staff understand what fraud looks like – is it embezzlement? Is it collusion? Is it insider trading? What is considered acceptable use within your organisation? What isn't acceptable? How do you know if an employee has been accessing sensitive data without an authorisation? The sooner employees know these answers - and can recognise when something doesn't look quite right - the more likely they'll be able to spot potential instances early on in their careers.

  • Implement Internal Controls

Internal controls are policies and procedures that organisations implement to reduce fraud risk. These include:

  • Corrective controls: This refers to policies for addressing fraudulent behaviour after it occurs, such as internal investigations or disciplinary action against employees who commit fraud.
  • Detective controls: This refers to monitoring systems that detect when an employee is acting suspiciously, such as a login report showing unusual activity on an account or a purchase order that doesn't match up with your records.
  • Preventive controls include access control and segregation duties, which stop employees from committing fraud in the first place.


  • Monitor and educate your employees

Employees are the backbone of any company, so they must know what to do when fraud occurs. Training your employees on how to prevent fraud and what to do if they think something suspicious is going on can help reduce the risk of a scam occurring within your business.

One way of doing this is by introducing fraud prevention training programmes into your company culture. You can take the help of a Financial Fraud Investigator to get more about it. This allows everyone in your organisation – regardless of seniority or role – to learn about how schemes work and how they can recognise when one might be taking place. By ensuring all staff members are aware of these issues, you'll give them the confidence needed not only to report any wrongdoing but also to spot it earlier than before

  • Reduce, even restrict, cash transactions

A company's cash transactions are more susceptible to fraud than those involving other forms of payment. The fact that cash transactions are difficult to trace and detect means that the company will have fewer opportunities to recover losses. Furthermore, because cash transactions do not leave a permanent record on the books, they are much harder to prosecute against perpetrators who attempt to commit fraud. As such, companies need to reduce their reliance on using cash for payments as much as possible.

It is important to remember that fraud can happen to any organisation. 

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