Organizations worldwide lose an estimated 5 percent of their annual revenues to fraud, according to the Association of Certified Fraud Examiners (ACFE) 2016 Report to the Nations on Occupational Fraud and Abuse . A single instance of fraud can be devastating: the median loss per fraud case was $145,000, and more than a fifth of the cases involved losses of at least $1 million.
The good news? There are some basic steps your organization can take immediately to lessen your vulnerability to fraud:
- Be Proactive. Adopt a code of ethics for management and employees. Evaluate your internal con- trols for effectiveness and identify areas of the business that are vulnerable to fraud.
- Establish Hiring Procedures. When hiring staff, conduct thorough background investigations. Check educational, credit and employment history (as permitted by law), as well as references.
- Train Employees in Fraud Prevention. Do workers know the warning signs of fraud? Ensure that staff members know basic fraud prevention techniques.
- Implement a Fraud Hotline. Fraud is still most likely to be detected by a tip. Providing an anonymous reporting system for your employees, contractors and clients will help uncover more fraud.
- Increase the Perception of Detection. Communicate regularly to staff about anti-fraud policies, ways to report suspicions of misconduct, and the potential consequences (including termination and prosecution) of fraudulent behavior.
Implementing these tips could help prevent your organization from becoming a statistic.
The ACFE is the world’s largest anti-fraud organization and premier provider of anti-fraud training and education. Together with nearly 80,000 members, the ACFE is reducing business fraud worldwide and inspiring public confidence in the integrity and objectivity within the profession. Learn more.