Tips for preventing and detecting fraud in your business
As a business owner, you know that financial success is key to keeping your doors open. Unfortunately, scammers are adopting new technology and more advanced methods to commit fraud leading to possible financial loss and reputational damage to your business.
A scam becomes fraud when deceit is used to obtain a benefit, or cause a loss, by deception or other means. Committing fraud is a criminal offence.
Data from the latest ACCC Targeting scams report revealed a 73% increase in scam losses across the Australian business community in 2022, totalling $23.2 million. This statistic highlights the importance of implementing scam and fraud prevention measures.
One of the challenges of fraud prevention in the digital age is that fraudsters have new tools and tactics at their disposal. For example, phishing scams and fake invoices are common ways that criminals can trick businesses into sending them money. In addition, cyber-attacks can compromise sensitive data, leaving businesses vulnerable to financial loss.
To protect your business, it's important to look out for red flags that could indicate fraud. These could include unexplained discrepancies in financial records, suspicious transactions, or employees who refuse to take time off or share their work with others. Additionally, be wary of unexpected requests for money or changes to payment procedures.
To prevent and detect fraud, there are a few key procedures you should implement.
- First, have clear policies and procedures in place for financial transactions, including who has access to sensitive information and how payments should be made. Use secure payment methods and regularly review financial records for irregularities. You should also conduct background checks on new employees and have a system for reporting suspected fraud.
- Educating your employees on fraud prevention and detection is also important. This could include training on how to identify and report suspicious activity, as well as how to follow company policies and procedures. Make sure all employees understand the importance of following security protocols, and regularly review these protocols to ensure they are up-to-date and effective.
- Finally, review your insurance policies to make sure you have coverage for potential losses due to fraud. This can include crime insurance, which can help cover losses related to theft or fraud, as well as cyber insurance, which can help cover losses related to data breaches or other cyber-attacks.
To protect your business from fraud, it's crucial to take proactive measures such as looking out for red flags, implementing financial transaction procedures, educating your employees, and reviewing your insurance policies. By following these steps, you can help ensure the safety and security of your business.
If you have any questions or concerns about fraud prevention and detection, contact our Accounting Team for assistance. They can help you develop effective policies and procedures, as well as review your financial records for irregularities.