Five Strategies to Prevent Fraud & Illegal in Business – Dhananjay Choudhary

Dhananjay Choudhary – Fraud prevention is a challenging task in a business organization. Starting from small start-up companies to big companies, all companies are vulnerable to fraud. According to a report, most of the companies faces a 5% loss due to fraud every year, and internal employees commit a large percentage of this fraud.There are several ways to tackle fraud in a business organization.

  1. Documentation and Regular update of Internal Systems

Documentation is a necessary process to control fraud. A managerial level employee should thoroughly check all the business papers.  All the transactions happening in the company should be carefully monitored. Cheques, invoices should have the signature of multiple people in them; those documents should be carefully checked by multiple employees. Access to sensitive documents and information should be controlled.

Proper segregation of duties of the employees is another crucial thing that should be followed. There should be more than one person involved in the transaction duties of the company. Regulating the vacation of the employees and carefully maintaining vacation policies are also very important as most of the frauds happen when most of the employees are on vacation.

  1. A proper audit system

A proper internal audit system should be in place. The annual and quarterly audits should be done, which can detect all kinds of possible fraud in the company. The well-trained audit committee members closely monitor cash situations.

  1. Hiring the right employee and proper training

After properly checking the background of the employees, they should be hired. They should be aware of all the anti-fraud practices in the company.  They should also be aware of the company’s policy regarding fraud as that would prevent misconduct from their side.  Any change in the attitude of the employees should be carefully watched. There should be a proper internal organizational structure of the company, and there should be written policies of the company. All the employees should be responsible for their activities inside the company.

  1. Reporting Policies

Every company should have an efficient fraud reporting policy. An anonymous fraud reporting system should be implemented as many employees do not want to reveal their identities while reporting something suspicious.  Every employee should be encouraged to report fraudulent activities in the company.  Most of the frauds are detected with the help of a tip from the person involved with the company like vendors, customers, acquaintances of the fraudster, etc. Therefore, honest employees and honest people associated with the company should always be encouraged.

  1. Hiring a fraud prevention expert

A highly trained fraud prevention expert should draft the company’s anti-fraud policies.  Certified fraud examiners are there who can provide a wide range of services starting from internal audit to financial forensic analysis.

It should be remembered that fraud in a company not only brings financial loss to the company but also makes a loss of reputation. Therefore, resources should be used to prevent fraud rather than allowing fraud to happen.

Dhananjay Choudhary is a lawyer from Coda associates, has ten years of experience in handling fraud and illegal money laundering cases.

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