Occupational fraud is fraud that is committed by an employee against their employer in the workplace. Occupational fraud can be classified as either asset misappropriation, corruption, or financial statement fraud which can result in huge financial loss if it is not addressed in time. To be able to identify if this is occurring in your business, there are seven prevention strategies that can be employed in your business to help pinpoint where things are going wrong and what can be done about it, these include:

  1. Have a Solid Program in place

Having a solid program in place with a code of ethics, signed by all employees is a great way to start. The solid program should include training, internal controls, periodic surveys, and a fraud prevention plan as part of employee’s performance goals.

2. Have an Anti-fraud Training Program

Practice an in-house training program, that educates all employees on how to detect fraud within the workplace. This program will be able to spot fraudulent activities within the workplace. Employees should also be trained in detecting the creation of fraudulent documents, how accounting transactions are altered, and also fraudulent journal entries.

3. Protection of persons reporting fraudulent cases

Hotlines are an effective way of getting employees to report fraudulent cases. So, whether you create a fraud hotline or emails or person-to-person reporting, make sure all employees know the importance of reporting any fraudulent activity and are aware of the options available to them.

4. Proactive Detection

You can prevent fraud from occurring by conducting a surprise audit, regular accounts reconciliation, and implementing continuous monitoring software to detect any abnormal occurrences.

5. A strong Auditing Team

Have an adequate auditing team with adequate resources and the authority to operate effectively without any influences from other senior management employees. Anti-fraud controls are of paramount importance in the prevention of fraud. A few important anti-fraud controls are:

  • Auditing of financial statements – both internally and externally
  • Better management and control of financial statements
  • Period reviews of financial reports
  • A code of ethics that employees should uphold at all times

6. Implementing Diligent Hiring Practices

It is highly important to thoroughly check employee’s backgrounds out before hiring them. Personality traits such as living beyond means, financial difficulties, unwillingness to share duties, divorce, family problems etc. should also be noted.

7. Employee Support Program

Have a policy in place that welcomes employees’ concerns and makes them feel comfortable approaching you with sensitive information.

With the abovementioned strategies in place, your business will be protected from fraudulent practices that can be detrimental to your business. If you are looking for financial assistance to audit and check your financial statements to make sure all is in order, contact us today.