No matter the industry, location or size of your business, it is possible to become a target of fraud. Fraud can be inflicted by employees, managers, and vendors in a variety of ways. Prevention and detection are crucial to reducing fraud, and every business should have a plan in place. Remember, preventing fraud is much easier than recovering the losses!
Signs of Fraud
Fraud perpetrators often display behavioral traits that can indicate their intentions. If you find that an employee is working excessively and denying assistance, they may not be working extra hours because they’re a model employee – especially if they are still producing poor accounting records. Other red flags include managers performing clerical duties when they normally would not, and employees who display different behaviors with their peers than with management.
There are simple steps that every business owner should implement to prevent fraud. When hiring, do not solely rely on a recommendation, even if from someone trusted. Perform background checks on employees, and be sure that everyone is taking some time off. This way, employees can review each other’s work and there are fewer chances to keep secrets. Perform periodic inventories and maintain accurate accounting records. Most importantly, create a fraud-hostile environment! If employees are encouraged to be on the alert for fraud, other employees will be much less likely to attempt it.
When you’re in need of financial guidance, visit the premier CPA in Honolulu! Request an appointment with Michael J. Yuda, CPA, LLC in Honolulu, Hawaii today!