Fraud prevention: Best practice for you business
The sad fact of the matter is that the level of vigilance which would render fraud completely impossible within a business, would also cripple any normal company. To have this degree of control and transparency within a company is simply impractical; it would be too costly and make any business completely inefficient. Yet with corporate fraud in privately owned companies costing the UK an estimated £45bn every year, tackling the issue is certainly an important responsibility. So how can your business take steps and implement systems which reduce the risk of internal and external fraud, without running itself into the ground? Here are a few tips and best practices to bear in mind…
Free company checks
There are a number of services out there who offer free company checking tools which can give you insight into exactly who you’re doing business with. Whether you’re employing an ex CEO of a company or partnering up with anther business, free company checking web sites give you detailed insight into the background of those you intend to work with, allowing you to make safe, educated decisions about the potential risks you expose yourself to.
There are numerous red flags to look out for when your free company check comes back. CCJs (Country Court Judgements), bankruptcy, abysmal credit scores, if a business has undergone numerous name changes over a short time period – if these tell-tale signs crop up, it is important to look into the matter further before giving the individual or company concerned access to your business .
IT security
“With great power comes great responsibility”. When just one individual or just one department has control over the security of your data and technology, abuses of this power become much more likely and much easier to perpetrate. To ensure that there are multiple people or departments involved in your IT security a few steps can be taken including:
- Cross referencing information internally
- Cross referencing information with external organisations
- Cross-departmental integration of databases
- Work with companies like Thruinc when moving large collections of data
Audit committees
The more red tape and the more bureaucracy present in a business, the less efficient it’s likely to be. However, without some level of supervision and safeguarding, corporate fraud essentially has a free pass. Setting up an audit committee is essential – particularly in rapidly growing businesses. This committee should be prepared to:
- Develop and implement internal fraud prevention tactics
- Look into allegations of fraud
- Investigate instances of malpractice
- Take decisive action when fraud is detected
Strong leadership
To ensure every team member understands , respects and values your stance on fraud, exercise strong leadership and back anti-fraud messages up with positive action. Any reports of, or instances of, fraud should be handled swiftly and strongly to send a message of non-tolerance. Clear lines of communication are also essential to ensure any potential fraudulent activity reaches the ears of management ASAP.
Destigmatised whistle blowing
In recent years, high profile instances of whistle blowing have resulted in the ostracisation of whistle blowing employees from their organisations. Yet destigmatising whistle blowing, and ensuring your employees have the tools and knowledge to report suspected fraudulent behaviour to the appropriate body should be a priority.
Have you encountered fraud in your business? Have you implemented a system to help reduce the risk of corporate fraud? Have you ever blown the whistle on fraudulent activity? We’d love to learn more about your experiences, share your thoughts with our readers below.