Fraud is a growing concern for all businesses with many affected each year, whether they care to admit to it or not is another matter. The key to reducing the chance and therefore the impact on your organisation in terms of lost money and potentially getting a bad reputation is to have an effective internal control system.
There are five anti-fraud points that companies should implement starting with having a strong anti-scam stance, which should be felt across the whole organisation.
An Empowered Audit Committee
An audit committee is a necessity in a large organisation, especially if stakeholders aren't part of management (both private and publicly traded). The committee needs to be aware first of all of the fraud risks that are present to the company as well as other potential risks of scams that may crop up in the future. The audit committee should work with management to understand the monitoring systems and how they are looking to mitigate those risks. A good committee must ensure they remain sceptical and investigate everything no matter how small.
Regular and Detailed Fraud Risk Assessments
Regular is really key, the threat will be significantly reduced if employees know that accounts and systems will be regularly assessed and will catch any outside fraud as soon as possible and hopefully before the scam does too much damage. An effective fraud assessment should cover different fraud scheme scenarios that could be carried out, the people in the organisation that could carry out such schemes and the impact it would have on the organisation.
Educating Employees - Anti-Fraud policy
It isn't uncommon for employees to abuse the company's reimbursement policy or use the resources for their own gain which can go undetected and not seen as fraud however misuse of company assets is a waste of time and resources, costing the company. Fraud, in most instances starts out small so nipping this in the bud will eliminate many of the organisations problems. A fraudster will start with taking advantage of expenses then likely gain confidence and will start with other scams.
Organisations should implement a no tolerance policy in order to send the message to all employees that any type of fraud or misconduct will be severely dealt with.
Responding to Fraud claims
No matter the size of the organisation, every fraud allegation should be investigated as the potential effect on the organisation could be huge. A policy should be implemented, a hard print that the organisation will follow for collecting evidence, the responsibilities that each department and managers have and who will be informed depending on the severity of the allegation.
Effective Reporting System
Firms should all have a hotline to report scams they have encountered or suspect. Using a hotline is one the easiest for both employees and the business to operate and is also the least expensive way for reporting potential scams.
Regular review of the hotline should be conducted to ensure it is as efficient as possible either by management or a third party. The hotline shouldn't be limited to employees. To cover any potential fraud the number should be external to cover customers and suppliers too and if the business is global it should operate 24/7. As part of employee training, the types of activities employees should watch out for and report should be included.
For more in depth of anti-fraud schemes and scam prevention then I'd suggested attending a dedicated conference such as the Marcus evans scam conferences.