Being Sans Fraud
Once a business goes beyond having only the founder as an employee, the chance of it being the victim of fraud increases. As the company expands and hires more people and they are out of direct control of the owner, that likelihood increases dramatically. Having multiple owners also increases the chances of fraud. While it may be impossible to create 100% effective bulwarks against fraud, there are certainly various procedures that can be employed that will help to prevent or minimize fraud, or in the event that it happens, detect fraud relatively soon.
The following are just a few suggested areas for the institution of company policies or procedures intended to prevent or minimize fraud.
Consider the immediate dismissal of any employee found to have committed fraud
Management must set by example, adhering to a code of ethics and ethical business conduct
It is important to have a corporate culture that avoids unethical behavior, including such things as a hostile or overly competitive environment, and the pushing of employees to the point of burn out
Procedures involving the handling of funds and company books should be designed with fraud prevention and detection in mind
The appropriate use of IDs, passwords and other qualification thresholds for access to computer systems and files
Segregation of duties to avoid overriding sound internal controls
Possibility of requiring dual signatures for checks over a specified amount
Training staff, at all levels, but especially supervisors and managers, to be aware of signs of fraud.
Implementing rules that prohibit override of, or interference with, company policies.
Having an independent, external audit on a regular basis
The regular and prompt reconciliation of bank accounts and accounts receivable
Strict prohibitions against the acceptance of gratuities, gifts, etc. from vendors and contractors
Strict prohibition on bribing
Prohibition as to such improper actions as stealing company property, falsifying time or attendance reports, and falsifying expense reports
Of course, probably the most important aspect and reality of all of these rules, is that they must be respected by, and the example set by, top management and supervisory personnel. If that is not done, none of the rules will matter because the message will be clear that they are for show only.
