Belfast Telegraph

Wednesday 16 April 2014

Be wary of fraud from inside your company: it's not only corporate conmen who could try to fleece you

Question: I have heard that fraud is on the increase due to the current economic climate, how can I ensure that the wool is not being pulled over my eyes by my suppliers and employees?

Naomi Blaney, internal audit and forensic services manager, Baker Tilly Mooney Moore replies:

A: You are entirely correct. According to the Association of Fraud Examiners, the level of fraud has increased since the commencement of the economic crisis.

Fraud is therefore a very real threat to your business and it can be perpetrated from within or without or a combination of both.

It is imperative that you have fraud prevention methods in operation within your business, no matter the size.

It is very important to discuss this issue with your professional advisor, however the following fraud prevention methods can help to fraud-proof your business:

Integrity due diligence reports on new employees and suppliers, to ensure they are competent, trustworthy and have a proven track record.

You will be amazed at how much you could learn about potential employees before you employ them, or about suppliers before you contract with them.

Checks should be performed on all internal systems by a member of staff distinct from the member of staff completing the process.

This will help to eliminate the possibility that funds could be misappropriated by a single member of staff.

It is important that the same employee cannot authorise, process and record financial transactions within your business.

Routine audits are an excellent way to detect and deter fraud. Regular internal audits (once a quarter) and an annual financial audit will give management a level of assurance in relation to how their business is managing risk from both internal and external sources.

Introduce a fraud policy outlining the business's attitude to fraud, commitment to ethical standards and to a recrimination-free culture for whistle blowing.

A clear message should be communicated that fraud will not be tolerated and that wrong-doers will be prosecuted.