Fraud Checklist

Business Fraud Prevention Checklist

Bob has performed damage calculations and done forensic exams in a number of cases. He has valued employment streams, worked on insurance and fraud cases, and tort and contract disputes on a variety of other diverse topics. He has testified many times and has been in multiple trials.
He has performed SOX work, has done over 100 valuations, over a hundred audits/reviews and stock options accounting and forensic work (discovered a $300,000 embezzlement). He has done turnaround work and brokered various legal settlements.

Fraud incidents tend to disproportionately affect small businesses, especially organisations with fewer than 100 employees. They suffer higher losses according to the most recent study from the Association of Certified Fraud Examiners (ACFE). The primary reason why this occurs is that these businesses generally do a poor job of proactively preventing and detecting fraud. Business owners/management needs to accept the fact that fraud is commonplace and can happen to any business. Fortunately, the risk of fraud can be managed. Here is a checklist of simple and affordable measures that small and midsize business owner can take to combat the threat of fraud.

Set an appropriate ethical example for employees to follow. Employees will follow the lead of management, whether that lead is ethical or not.

Be alert to changes in employees’ behaviors, attitudes and lifestyles. As you interact with employees on a daily basis, you have the ability to observe changes in what otherwise might be considered their normal behavior. Some of the indicators to consider in this area would be the following:

Fraud is a crime that affects or has the potential to affect, every business on a global basis. Nothing you can do will completely eliminate the possibility that your business will become a victim of fraud. However, by following these simple steps you can go a long way towards the prevention and early detection within your organisation and implementing controls like having fraud and forensic accounting performed to help identify unusual activity. For more information, contact Robert L. Bates, CFE, CPA (Virginia).