Fraud Prevention Month
You know how the saying goes, you learn something new every day. Well, this week we learned that March is National Fraud Prevention Month. We also learned that nearly 80% of businesses were affected by fraud in 2016 alone. Seeing that percentage blew us away, we never would have guess that the number of businesses that have experienced fraud would be so high.
It made us think about what we do to prevent fraud and whether or not it’s enough. Over the last 20 years we’ve had out offices broken into twice, felt the sting of the recession in 2008 and have been targeted by fraudsters numerous times but each time we felt like there was something off. Just last week someone claiming to be with Idaho Power called us trying to convince us we were overdue on our bill but again, something felt off, so we took the time to do some research and found out that this is a common scam, one that Idaho Power received many calls about that same day!
Fraud can come from anywhere at any time. It can be completely random, like a phone scam, or it can come from within, from a disgruntled or malicious employee. Trying to prevent fraud, as a business, isn’t exactly simple but once you’ve developed a set of procedures it becomes easier and easier as those procedures become habit. However, even the best practices can’t stop all attempts of fraud.
Some of the things we do to prevent fraud are; shredding all of our documents no matter how sensitive or mundane they may be, encrypt emails that contain sensitive information, regularly change our passwords to our operating systems and client management software, send as many payments electronically as we can and continually look for new ways to be as secure as possible.
After seeing the statistic we mentioned earlier we did some research to see what other strategies we could use to prevent fraud and we’ll share what we found with you! To lower the risk of internal fraud it’s recommended to screen all job applicants thoroughly before hiring them. This may seem like a no brainer but some businesses interview so many people that doing a background check, following up with references and verifying their resume can be not only tedious but expensive.
It is also recommended that the bookkeeping responsibilities don’t fall onto just one person, there should either a step by step process with multiple people involved or a rotating schedule that changes the role of who makes payments, receives payments and has access to company checks / bank accounts. This can help prevent fraud in many ways, it helps increase accountability, prevents one person from controlling all financial aspects of a business and can set an example to your employees.
Doing surprise internal audits can also significantly improve the detection of illegal activity. This doesn’t just help identify internal fraud but can help prevent external fraud as well. If you do regular but random audits, they can help identify and irregularities that are red flags for fraud.
The last thing we’ll mention is how insurance can help. Typically, insurance is the last resort because it generally doesn’t help until you’ve experienced fraud and need to file a claim on your policy. The insurance policy that would cover some fraud related losses would be a crime insurance policy. (Not all fraud is a covered peril, for example, voluntarily parting with your money is never covered, like wiring money to Africa.) Crime insurance is a stand-alone coverage that can be purchased through most major insurance carriers. It is not included in most business owners policies and provides a wide range of coverage, including fraud via computer or through dishonest acts of employees, but, as with all policies, will differ between insurers so it’s best to meet with an agent, like us, and see what your options are!
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