According to research conducted by the Association of Certified Fraud Examiners (ACFE), small businesses (fewer than 100 employees) suffer more fraud losses than their large counterparts with the median loss per incident at $190,000. Most large businesses however, have an internal audit department to combat fraud whereas this department is non-existent in small businesses. What is a small business to do to combat fraud? The ACFE has provided 5 steps to prevent fraud:
1. Establish internal controls
2. Setup formal employment guidelines
3. Fraud prevention training
4. Conduct random and routine checks
5. Hire a CFE Certified Fraud Examiner
Fraud is definitely more prevalent in small businesses due to their small size and budgets that do not allow them to attack the problem like larger businesses. It is important for small businesses owners to take some precautions to ensure that employees, contractors or anyone else that has access to the businesses information and/or assets has been properly screened and controls are in place so that fraud can be detected. By incorporating these small steps into your existing operation, the potential for a fraud loss can be minimized.
For more information on fraud and how to prevent it, feel free to check out the ACFE’s site and the following links:
http://www.acfe.com/documents/Fraud_Prev_Checkup_IA.pdf
http://www.acfe.com/documents/2006-rttn.pdf
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