Most managers of accounting firms know business owners who’ve lost cash or stock due to fraud. However, fraud has a wide reach and also includes the loss of intellectual property, sales people underquoting, unauthorised gifts and kickbacks, unfair personal expenses, time theft and more. Did you know that the average business loses an amount equal to 6% of its revenue to fraud?
A recent national survey of fraud, bribery and corruption in businesses suggested that, in 47% of cases, the occurrence of fraud was attributed to deficient internal controls. The survey warned that ‘it’s the people you tend to trust’ who are most responsible for fraud, with 75% of reported cases committed by employees.
In talking with your business clients, have you brought up the risks of fraud? Do you believe your clients could use your guidance in identifying and addressing these risks?
Some of the strategies recommended by experts include:
- Ensure that there are clear written agreements in place with all staff in relation to intellectual property rights and monitor off-site distribution of company information and material.
- Ensure transactions cannot be deleted. Ensure there is a clear audit trail for all transactions.
- Have systems with unique passwords that are not shared, with access rights that govern what each person can and can’t do. Change passwords on a regular basis.
- Introduce a formal purchasing system to ensure only authorised staff can place orders, at the right price, for the right quantity, from the right supplier and on the right terms.
- Establish a fixed asset register to ensure plant and equipment is clearly identified and easily located.
- Review profit and loss reports on a monthly basis. Ensure that cash balance correlates accurately with recorded income and expenses for the month. Monitor any irregular transactions.
- Manage risk from the top. Train the business owner to understand where fraud can occur and how to manage risk through appropriate systems and procedures.
Find out more, register for our upcoming webinar on fraud prevention
On Wednesday 13th March 2013, we’re running an online training session on ‘How to protect your clients against the risk of Fraud.’ Special guest speaker Raquel Grieve, Associate Director of Forensic Services with BDO Sydney will be discussing the main causes of fraud for small and medium-sized businesses and how you, as a trusted advisor, can assist your clients in developing appropriate internal controls and policies to prevent fraud.
For more information and registration details, visit www.trainingbeyondaccounting.com.au
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