SPOT THE PLOT BEFORE YOUR GOODS GET GOT
What is occupational fraud?
Occupational fraud generally refers to fraud committed by an organization’s employees. This kind of fraud can be put into three categories: asset misappropriation, corruption, and financial statement fraud. According to the Association of Certified Fraud Examiners (ACFE) 2018 report to the nations, the U.S median loss from occupational fraud is around $108,000. Although there is not a typical profile of a fraudster in this area, evidence shows the presence of pressure. opportunity, and rationalization in each case on average. Next, we decide on these factors.
How is it affecting businesses?
Occupational fraud imposes tremendous costs upon businesses around the globe. Despite having highly intelligent and sophisticated fraud detection measures in place, many businesses still fall foul of occupational fraud. Estimations from the Association of Certified Fraud Examiners (ACFE), suggest that businesses lose around 5% of their revenue each year due to fraud. In monetary item, the ACFE estimate that this would equate to losses of more than $3.8billion each year.
An important challenge facing organisations is ensuring that they have measures in place to quickly identify occupational fraud. The speed by which frauds are detected will have a significant impact on the size of the fraud in their business.
What to look out for to prevent this.
Assess Your Risk of Fraud. The first step in protecting your business from occupational fraud is assessing your risk and implementing a plan to respond to fraud. This step is the first and most important, as it will give you the basis for protecting your business from criminals.
The majority of businesses are not prepared to respond to fraud as they have not assessed their risk and put it in place. Your plan should include preventative strategies, protocols for hiring and retaining employees, employee training and education, as well as disciplinary actions if fraud is discovered.
Limit Acces to Authorized employees.
A good quality office security system is always important. You can protect your intellectual data by ensuring only authorized employees have managed access to confidential information. In the event that information is leaked, you will be able to target your investigation to include only those who had access to the information.
Managed access control or keyless entry is one of the easiest most cost-effective ways for you to increase security. An access management system is also vastly more effective if it’s integrated with an intrusion detection system so different employees can have different access levels.
For example, employees whore authorized to open the facility will be allowed access and will be able to disarm the security system. Employees who are not authorized to open the facility will not be allowed access to the facility when the security system is armed.
Also when the system is hooked up to a CCTV system and a central monitoring system this means a simple phone call can make instant deleting employees, changing access levels and dorr locking/unlocking shifts.
To be truly effective this system needs electronic locks, badges, or cards and readers that will give you a lot of control over the security of the entire system, eliminating the expense of re-keying or changing locks when an employee leaves.
Access control is essential and immediately decreases your liability and risk.
Implement internal controls
There are many internal controls that you can implement to help prevent occupational fraud. Fraud often occurs when there are opportunities such as working in isolation or a lack of regular assessments, so implementing a set of internal controls can have a huge impact. Consider implementing the following controls.
- Ensure that one person does not have control over an entire financial transaction. This creates a balanced system where a secondary employee notices finance errors or fraudulent activities quickly.
- Implement a reporting system so employees can inform you of possible fraud anonymously.
- Require all employees to use their vacation time. An employee who does not take a vacation may be concerned that their fraudulent activity will be noticed. This is especially important in the accounting department.
- Create a policy that ensures employee credit cards are not used for any personal spending and also and verify all charges.
- Create a policy that includes the use of business assets, such as vehicles or cell phones. This can include examining the use of assets, such as reviewing cell phone bills or vehicle logs, on a regular basis to ensure assets are being used for business purposes only
Regularly Monitor Your facility
One of the major motivators for fraudulent activities is working in isolation. if you are unable to reduce opportunities for isolation, consider implementing a quality CCTV surveillance system that is monit24/7. Employees will know they are being watched and recorded, so also make sure there are no blind spots in sensitive areas.This will deter fraudulent behaviour while employees represent, while also protecting your business after the office is closed.
Get to know your employees
Building positive relationships with your employees can help prevent occupational fraud. Not only will you build a relationship of trust, but you will also be able to identify motivating factors such as environment, also helping reduce the risk of occupational fraud.
While these5 strategies are a great step forward in protecting your business from occupational fraud, a more comprehensive review and assessment of your business will effectively protect you from a variety of risks, both internal and external.