Part 10 of 10, Fraud Inoculation
Other Possible Areas of Fraud
One of the areas of possible fraud, despite the above level of monitoring, includes employing the assets for personal use and not reimbursing the firm. Another is stealing either assets or inventory. Unless there is a 100% physical inventory every day, inventory remains vulnerable to fraud. Therefore, walking around can help.
The cash registers are another area open to refund fraud, etc., though daily cash register balances are reported to accounting and physical scanning and reconciliation of cash register tapes several times a week restrains this potential avenue. Credit card fraud is possible too, though any significant drop-off of credit card deposits is quickly picked up in the weekly cash forecast to actual comparison as well as monitoring daily bank balances.
As stated in Part 1 of this 10 Part post, there are creative ways to commit fraud that have not yet been invented. However, if a firm really wants to drastically reduce the likelihood of material fraud from happening to their firm, then the combination of the detailed fraud inoculation/monitoring plan outlined in these ten parts, along with implementing the good suggestions garnered through a Fraud Risk Assessment, will help immensely.
Other anti-fraud techniques found on my web site include implementing an anonymous Tip Hotline. Communicating with employees and vendors better is also essential. One of the best ideas I have heard is sending around to all employees email stories of local fraudsters who have been caught and prosecuted, along with their prison terms. These are actions which can help maximize the perception of detection of fraud, which perception of detection is critical to deterring future fraud.
The bottom line is that if you balance your cash daily, your chance of business success for your small business increases dramatically while your likelihood of material fraud drops to near zero.