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February 25, 2022

How To Protect Yourself from Occupational Fraud

As a business owner you will encounter different setbacks and obstacles but it is definitely your worst nightmare to have an employee steal from your company’s pocket. There are several cases of employees committing similar acts and inflicting significant harm. In this blogpost we will discuss signs of occupational fraud and implementing practices to prevent you from experiencing occupational fraud.

One of the most effective strategies to avoid occupational fraud at your firm is to ensure that all of your employees are happy with their jobs and with the company as a whole. Lead by example if you and your senior management team do business professionally and responsibly, your staff will most likely follow suit. Good ethics also flow over into the market, where your firm will be seen positively, which may lead to increased revenue and community goodwill. Employees should be rewarded for their efforts. Tell them how vital they are to the company's success.

In order to get yourself familiar let us tackle some of the most common types of occupational frauds.

Corruption - This is maybe the most well-known form of occupational fraud. Bribery, kickbacks, and extortion are some examples. Corruption, on the other hand, is not the most prevalent type of occupational fraud, nor is it the most expensive (on average) to enterprises.

Asset misappropriation - Asset misappropriation is by far the most prevalent type of occupational fraud; examples include skimming, fraudulent disbursements, and larceny (false sales/shipping, theft of office equipment, and so on).

Financial statement fraud - This may be the least common source of occupational fraud, but it is certainly the costliest for businesses. Examples include improper disclosures, fictitious revenues, and improper asset valuations.

Now that we are familiar with some common types of occupational frauds, let us see the ways of preventing it to happen.

Promote an honest and trustworthy working environment

Set the tone by leading the way in emphasizing honesty and diligence within the company.
A solid program begins with a code of ethics signed by all workers and continues with anti-fraud rules, training, internal controls, and quarterly employee surveys to determine the extent to which employees feel management behaves honestly and with integrity.

Hire a strong auditing team

A strong and trustworthy auditing team will be your backbone in keeping everything in order and will mean the difference between sleeping well at night or potentially losing money from fraud acts. Your auditing team should have adequate resources and authority to operate effectively and without undue influence from senior management.

Employee Support Programs

Employee support programs are beneficial for a variety of reasons, but in the context of occupational fraud, they can help address some of the underlying issues that manifest as "red flag behaviors." For example, an open-door policy that encourages employees to speak freely about financial, family, or addiction pressures can help alleviate them before they become acute or lead to destructive behaviors.

Be Conscious of High-Risk Positions

When establishing an anti-fraud plan, the focus should be on personnel who are more likely to commit occupational fraud. Staff in areas prone to fraud, such as management, accounting, and sales, in particular. This is due to the fact that they are at the forefront of bills, payments, and other valuable products.

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