ISSUE NO. 4
This is the exact logic that can get a business into trouble. That’s because small businesses are uniquely vulnerable to fraudulent activity. The per-employee losses in the smallest businesses are 100 times the amount of their largest counterparts.
Lack of risk awareness is one of the biggest — and most easily solvable — problems. Fraud is rarely committed by the people you’d think. Most fraudsters don’t wear orange jumpsuits; they wear sweater sets and sensible shoes. It is often older employers; managers; someone you trust implicitly — and that is exactly how they get away with it.
But how can my most trusted employee defraud me? you ask. Fraud isn’t always malicious. Often, it’s a good person in a tough situation — and this economy isn’t helping. Fraud happens when pressure, opportunity, and rationalization coincide.
Cash fraud is most common, and fraudulent disbursements are the most common form of cash misappropriation. This means false invoices or forged checks.
First, you need an excellent fraud policy. Then you need to enforce that policy. This means vigilance and follow-through. Internal controls and separation of duties are your best defenses.
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