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\nFraud is an unfortunately common enemy of businesses of all sizes: the most recent report into fraud by the Association of Fraud Prevention (ACFE) found it cost businesses a median of $150,000 with the average organization losing some five per cent of its revenue to fraudulent activities.<\/p>\n
Fraud can affect businesses in various ways, the chief one of course being financial, and fraudulent activity can range from activities such as deliberately claiming more hours worked on a timesheet, to major frauds involving money theft sometimes over a longer time frame.<\/p>\n
Fraud prevention<\/strong><\/p>\n Technology can be used and procedures put in place to help combat fraud. For example, advanced tamper proof security checks<\/a> can address this particular fraud method commonly seen in smaller businesses, and various spot audits and data analysis can offer procedural fraud detection.<\/p>\n Fraud can cause problems in business in the following ways:<\/p>\n Financial<\/strong><\/p>\n Most fraud involves directly or indirectly the theft of money whether through actual theft or abuse of time and irregular use of equipment.<\/p>\n The money lost while a fraud is being perpetrated has an obvious effect, but then there\u2019s the costs of \u2018clearing up\u2019 after and perhaps instituting fraud prevention measures such as the use of Fraud Monitoring Tools<\/a>.<\/p>\n Reputation<\/strong><\/p>\n If your business has fallen victim to a major fraud, it can have a detrimental effect in the eyes of your actual and potential customers. There have been various high-profile frauds at major companies that unquestionably tarnished their reputations.<\/p>\n The longer term effects of fraud in terms of loss of goodwill and cold, hard cash in lost business can last well into the future and take considerable hard work to correct.<\/p>\n Accounting and capital <\/strong><\/p>\n Your costs to audit your accounts could well increase as extra checks may be needed to ensure you\u2019re fully recovered from a fraud episode and your accounting systems are efficient.<\/p>\n Attracting funding could be diminished as lenders could be put off by news of recent frauds in your business.<\/p>\n Company morale<\/strong><\/p>\n Fraud can have a devastating effect on company morale in various ways:<\/p>\n Culpability<\/strong> – if someone in a team has been discovered conducting fraudulent activities, it\u2019s possible their immediate work colleagues may feel guilty for not detecting anything amiss.<\/p>\n Management fraud<\/strong> – if it\u2019s revealed that management or those in senior positions have perpetrated a fraud, then trust in the organization amongst the workforce at large can be severely diminished.<\/p>\n