A guide to preventing and detecting fraud

Given the wide range of fraud that could be committed, what steps can you take to minimise the risk of fraud being perpetrated within your organisation?

1. Begin by recruiting the right people to work in your organisation. Make sure that you check out references properly and ensure that any temporary staff are also vetted, particularly if they are to work in key areas.

• Ensure that you have a clear and concise policy that fraud will not be tolerated within the organisation and ensure that this is communicated to all staff.

• Consider which areas of your organisation could be at risk, then plan and apply appropriate defences. Target the areas where most of your revenue comes from and where most of your costs lie. Develop some simple systems of internal control to defend these areas. Effective controls include:

Segregating duties

Supervision and review

Arithmetical checks

Accounting comparisons

Authorisation and approval

Physical controls and counts

• Wherever possible do not just have one person who is responsible for controlling an entire area of the business. This includes the accounting function but also includes other important areas. For example, ordering goods, stock control and despatch in a business where stocks include attractive consumer goods.

• Always retain a degree of control over the key accounting functions of your business. Don’t pre-sign blank cheques other than in exceptional circumstances and ensure that the corresponding invoices are presented with the cheques.

• Be on the lookout for abnormal requests from staff involved in the accounting function.

• Watch out for employees who are overly defensive of their role. Similarly watch out for dissatisfied employees, who might be bearing a grudge or those whose circumstances change for the worse or bizarrely for the better.

• Watch out for significant changes in cashflow when an employee is away from the office, on holiday for example. Similarly, be aware of employees who never take their holiday. These could both be indicators of fraud, something we see when we look back.

• Prepare budgets and monthly management accounts and compare these against your actual results so that you are aware of variances. Taking prompt investigative action where variances arise could make all the difference by closing the window of opportunity afforded to fraudsters.

1. Where a fraudster is caught, make sure that appropriate action is taken and learn from the experience.

If you want to find out anything further about this topic then please feel free to call on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email vee@navigatebr.com

This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.