How to protect your business from fraud

No-one likes to imagine their company being subject to fraud, but it’s actually becoming more common – incidents of fraud at UK businesses spiked throughout 2016. The number of companies saying they had been affected by fraud rose from 74 per cent through 2015 to 90 per cent. This makes Britain one of the world’s leaders in business fraud. It’s important for you to take steps to ensure that your business is completely protected against potential attacks. Here are five key tips for how to protect your company against fraud from employees.

1. Conduct background checks during hiring

It’s not something that you like to imagine from the people you are employing, but there’s a chance that they may not be completely honest about their past. That’s why it is worth carrying out a criminal record check – you can establish whether you should have any cause for concern. It should be noted, of course, that you can’t refuse to employ someone on the basis of spent criminal convictions, and equally it would be very wrong to assume that anyone who has committed fraud in the past is automatically likely to do so again, nevertheless it’s important to know all the same.

Additionally, it’s also worth noting that up to 88 per cent of employees who commit fraud against their employer have never been charged or convicted before, so these kind of background checks can’t protect you entirely. That’s why you need to follow some of the best practice ideas below.

2. Have your accounts externally audited on a regular basis

If you have your accounts run internally, not only does this leave you potentially at the risk of fraud from employees but it also means that you team could be overlooking potentially worrying signs that there could be something illicit being carried out within the business. To minimise both of these risks it’s a good idea to have your accounts audited externally.

When you’re choosing the external company to deal with the audit, choose a firm with experience in forensic accounting. Forensic accountants use their knowledge of accounts practice to investigate your business in depth to get the bottom of any discrepancies. Additionally you should choose a forensic accountant with specific local knowledge. For example, if your business is based in the capital, WTCA's forensic team in London have worked with multiple companies across the city.

3. Create a better working atmosphere for staff

When employees commit fraud against a business, it’s often because they don’t look at the company in a positive light. Sometimes one of the most effective ways to stop corporate fraud is simply to make your business a nicer place to work. When there is strong bond between staff as well as a positive working environment, employees are more likely to see their co-workers and employers as humans, and to treat the business with respect.

If there is a negative or unpleasant atmosphere at work, it can really be worth making changes to business practice to keep everyone happy. It will undoubtedly pay off in the long-run with lower rates of fraud and increased productivity from staff.

4. Put controls in place

Businesses need to spend time implementing controls that can stop fraud from occurring. Often these controls will need to be personalised to your business but it could include a system in which any spending (even by managers and accountants) needs to be signed off first by another member of staff.

5. Set up a system to allow reports to be made

Another way to give your business an advantage against potential fraudsters is to put in place an anonymous opportunity for employees to report their suspicions regarding fraud at work. Many members of staff just want to see the company succeed and work in an honest way, so when they see fraud or other corporate crimes being committed it can be extremely frustrating for them. Providing them with an anonymous reporting system means that they can provide you with the information which you can then properly investigate to see if there is any truth in what is being claimed.

Of course no-one wants to accuse their co-workers of crimes that they haven’t committed, but at the same time it’s right to have this sort of system in place to deter fraud.

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