Top 5 Fraud Prevention Tips for Businesses

Raise awareness. A significant number of frauds are detected either accidentally or
as a result of tip-offs. This reinforces the importance of raising fraud
awareness in the workplace. Organizations should emphasize that it is
everyone’s responsibility to find and report fraud.

Find the red flags. Fraud cannot be eliminated completely; however there are a range
of warning signs and alerts (red flags) that are usually present before fraud
is committed. These alerts can provide early warning signs that something is
not right and increase the likelihood that the fraudster will be discovered.

Catch the cheats. There are two key ways to detect fraud – training and experience
combined with the necessary mindset that fraud is always a possibility.
Techniques need to be identified to help determine whether further action is
required. And remember, fraud can happen at all levels of the organization.
Fraud committed by managers is nine times more damaging (financially and
affecting staff morale) than fraud committed by rank and file employees.

Develop a fraud response plan. Organizations should develop a fraud response plan and
ensure that the plan includes provisions for learning lessons from fraud
incidents and appropriate follow-up action. A fraud response plan should also
include prevention methods such as screening of current and new employees,
monitoring and safeguarding assets, internal and external audits, computer
based controls and anti-fraud education programs. And this does not have to be
an expensive venture, an investment in common sense is often enough.

Stop fraud at its source. Organizations should develop a sound ethical culture in
order to prevent fraud. Key actions could include a mission statement which
focuses on ethics, clear policy statements, a route which suspected fraud can
be reported (a whistle blower policy for example) and an internal audit
process.

Discussion Questions:

 1.  Do you believe that a whistle blower policy will prevent fraud?

2. Does a code of ethics deter fraud in an organization?

3. Do you agree that preventing fraud should be part of managements responsibilities?

To read more on Fraud: visit the CGA site

Also read by the CGA: Does Canada have a problem with occupational fraud?