As a business owner, it is important to always remain cognizant of the possibility of fraud. To put it simply: fraud can wreck your profitability, reputation, and more. Therefore, not only should you have a system in place to identify fraud, but you should also take steps to prevent fraud from happening in the first place. In this article, we discuss business fraud prevention steps that can serve to both identify red flags and mitigate risks.
Know Your Employees
Unfortunately, business fraud is often committed from within. And those who perpetrate fraud usually display behavior that is indicative of the intention to commit fraud. Therefore, observing and listening to employees can help you identify when a specific employee is a possible fraud risk. For example, a sudden attitude change in an employee may represent a red flag for fraud. In addition, an employee’s desire to begin working after hours may be worthy of a closer look.
All employees should be aware of the business’s fraud risk policy, common types of fraud, and the consequences for committing fraud. Often, simply making employees aware of the business’s commitment to combating fraud is enough to prevent it—at least from within. In addition, this will encourage honest employees to spot and report signs of fraud or theft.
Set Up Internal Controls
Internal controls are programs or plans implemented by a business to ensure the integrity of its financial records, safeguard its assets, and prevent and detect fraud and theft. An important internal control that helps businesses prevent fraud is the segregation of duties. In addition, consistent and accurate documentation is an internal control that can help reduce fraud. A business’s internal control program should be routinely monitored, reviewed, and revised to ensure its effectiveness.
Hire Qualified and Trustworthy Professionals
Finally, the best way to prevent business fraud is to hire qualified and trustworthy professionals. For example, certified public accountants (CPAs), certified fraud examiners (CFEs), and CPAs with certifications in fraud forensics can all play key roles in establishing fraud prevention policies and procedures. However, not all professionals have the experience or reputation required to effectively prevent business fraud. Therefore, when hiring professionals of any kind who will have access to sensitive business information, such as financial account numbers, it is crucial to make sure that those hired possess reputations built on trustworthiness and quality service.
Contact a Florida Corporate and Business Law Attorney
As a business owner, it is important for you to have excellent legal representation. In addition, it is imperative that you work with a legal professional who can help you establish anti-fraud measures. At Gueronniere, P.A., founding attorney Grace de la Gueronniere has the experience and knowledge necessary to fulfill all of your corporate and business law needs. Please contact us today to arrange an initial consultation with our talented Florida lawyer.