November 15th, 2017.

Fraud is a real and growing problem for organisations of all sizes. For SMEs, it can be catastrophic. According to the Annual Fraud Indicator 2016, the cost of fraud to the UK economy is £193 billion a year – and of course, that’s just the fraud we know about. Fraud Awareness Week is an excellent opportunity for businesses to consider their key risk areas and what to do if you discover fraud in your business.

Six risk areas: Typical business frauds

- External attacks. Identify any areas that might be vulnerable to hijack, such as a large transfer of money to a supplier. Ensure the process for completing the payment is secure, for example by verifying account details from two separate sources.

- Payroll fraud. Look out for warning signs such as an ex-employee kept on the payroll (with pay diverted to the fraudster), employees manipulating timesheets to increase their hours or an employee who requests an advance which is never paid back.

- Accounting fraud. An employee might manipulate the company’s accounts to cover up a theft or use the company’s accounts to steal. Look out for expense account fraud, such as forged receipts or double claiming for expenses. Run spot-checks on your accounts, including accounts that have been written off by the business.

- Supplier fraud. This can be committed by suppliers on their own or in collusion with an “insider” employee. Examples include an employee who accepts a payment in exchange for giving an advantage to a particular supplier, or where a supplier inflates invoices to charge the company for more goods that it provides or a higher price than was agreed.

- Look out for employees who are unwilling to take annual leave or seem reluctant to let others get involved in their work (out of a fear that the fraud will be discovered). Implement compulsory annual leave in high-risk areas.

- Low-level theft or fraud. Don’t forget about the cumulative impact of theft from your company. This could include anything from theft of petty cash to misuse of company services, for example using company services or resources, such as a company car, for personal use.

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