Nearly Half Of Businesses Are Victims!

All companies are vulnerable to internal fraud. But treating all your employees with suspicion is not the answer.

Research conducted by PricewaterhouseCoopers and the Chartered Management Institute (CMI) revealed that 48% of companies have found themselves the victims of fraud, and 30% say they need to improve their cashflow management.

The research also suggests that ninety percent of employees also feel that their boss doesn’t trust them as only 8% have ‘sign-off’ responsibility at work.

Petra Wilton of the CMI says: “Fraud can be stopped in the early staged if robust detection procedures are in place. However, rather than focus on the checks and balances that they introduce, employers need to highlight the impact that fraud can have on individuals and the business.

Failure to do so means that organisations run the risk of stifling employees if they believe they are being watched by ‘Big Brother’,” she adds.

What Can You Do?

The CMI has put together a booklet called ‘Workplace Fraud: the enemy within’, providing many good ways of dealing with deterring and detecting internal fraud, including:

- Development of a fraud strategy statement which outlines the acceptable behaviour and unacceptable behaviour.

- Introducing an audit committee in order to prevent fraud and investigate allegations of malpractice.

- Using technology to help by sharing information across the organisation to cross reference information and detect possible fraud easily.

Fraud is unacceptable, we all know it, but make sure this is communicated to all your employees from the top of the chain right the way down. Make sure they are aware of what they should do if they suspect there is a problem.

The CMI also wants employers to recognise that not all fraud is purely opportunistic. The motivation for dishonesty is usually caused by the pressure of unrealistic targets and financial problems.

Gillian Lees of the Chartered Institute of Management Accountants (CIMA) says: “Fraud is a major risk so organisations need to ensure that they have a robust fraud policy that is disseminated effectively and taken seriously throughout the organisation.”

What Do You Think?

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