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Seven steps to prevent fraud in your business

by , 19 June 2013
According to Eye Witness News, last month the police confirmed a major-general in charge of the Hawks in Mpumalanga was arrested for fraud. Its alleged Simon Mapayane, filled fraudulent travel claims. He's due to appear in court on 26 June. It's possible the same thing is happening in your company or worse; one of your employees could be taking money from you and disguising it so well you can't realise it. Here are seven steps you can use to prevent fraud in your business before it costs you tons of money without you even knowing.

According to The Labour Law for Managers Loose Leaf Service, fraud is when an individual misrepresents the truth causing an injustice to another individual.

As an employer, you need to be aware that your business can be targeted for fraud by con artists or worse one of your employees. And the scary part is this fraud could be disguised in such a sophisticated manner that you won't even recognise it.

That's why it's crucial that over and above reporting theft, fraud, extortion and forgery, you take proactive steps to prevent fraud altogether in your company.

Use this seven step fraud prevention model to curb fraud in your company

The Labour Law for Managers Loose Leaf Service advises you follow these basic procedures to reduce fraud in your business:

Step#1: Set up a fraud response plan

This plan must detail the reporting lines and the basic steps to follow once you discover the fraud. These basic steps can include confiscating access cards or keys, restricting network access and removing signing powers.

Step#2: Introduce checks and balances

Here are some of the things you can include in your checks and balances:

  • Ensure employees keep proper records.
  • Prohibit employees from earning outside commissions or facilitation fees for carrying out their job.
  • Don't let the same person requisition, write and sign business cheques.
  • Inspect bank statements, including fuel card statements for unusual purchase patterns, dual endorsements and unfamiliar or single, repeat vendors.

In addition to this, you must understand the key risks and common fraud taking place in your industry. Get the experts to review your controls and give expert forensic advice to ensure that you stay one step ahead of the con artists.

Step#3: Code of ethics

Clarify your ethical rules for doing business. Make sure your employees practice what it preaches. Your code must incorporate a zero tolerance policy to fraud and corruption.

Step#4: Fraud awareness training

Train your employees on how fraud takes place, the signs of fraudulent activity, what to look out for and how to react to it, and their ethical duty to protect the business.

Step# 5: Gift policy

Ensure your suppliers and employees are clear about the boundaries for gifts or benefits they can provide or accept. One of the best approaches to gifts is a transparent gift register that's accessible to all your employees.

Step#6: Training on internal policies

Train and inform your employees about the content of your organisation's internal policies on fraud. Make them sign acceptance of these policies.

Step#7: Fraud and ethics hotline

Have an independent hotline in place and encourage whistle-blowing (give employees the opportunity to report suspicious behaviour anonymously). It's important that you provide a safe environment where honest employees feel free to report irregular and unethical behaviour without fear of recrimination or victimisation.

There you have it. Use these steps to prevent fraud in your business before it costs you tons of money without you even knowing.

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