Organizations worldwide lose an estimated 5% of their annual revenues to fraud, according to the Association of Certified Fraud Examiners (ACFE) 2016 Report to the Nations on Occupational Fraud and Abuse. A single instance of fraud can be devastating: the median loss per fraud case was $145,000, and more than a fifth of the cases involved losses of at least $1 million.
The good news? There are some basic steps your organization can take immediately to lessen your vulnerability to fraud:
1. Be Proactive
Adopt a code of ethics for management and employees. Evaluate your internal controls for effectiveness and identify areas of the business that are vulnerable to fraud.
2. Establish Hiring Procedures
When hiring staff, conduct thorough background investigations. Check educational, credit and employment history (as permitted by law), as well as references.
3. Train Employees in Fraud Prevention
Do workers know the warning signs of fraud? Ensure that staff members know basic fraud prevention techniques.
4. Implement a Fraud Hotline
Fraud is still most likely to be detected by a tip. Providing an anonymous reporting system for your employees, contractors and clients will help uncover more fraud.
5. Increase the Perception of Detection
Communicate regularly to staff about anti-fraud policies, ways to report suspicions of misconduct, and the potential consequences (including termination and prosecution) of fraudulent behavior.
Association of Certified Fraud Examiners
Implementing these tips could help prevent your organization from becoming just another statistic. Take action today.