How to Identify Fraud in Your Company Finances
Something is not right with your business finances!
Have you ever looked at your business finances and felt something was off track? You may be a victim of business financial fraud. Studies reveal that the average business may lose up to 5% of its income to fraud. As a business owner, you must understand how to spot and avoid fraud when accounting, so that your company’s financial health is protected.
What is business fraud? It is the act of misrepresentation that could lead to a business loss. There are five main types of financial fraud: corruption, asset misuse, online fraud, financial statement fraud, and external fraud.
1. Corruption
When your employees discover a loophole in your accounting practices, they may attempt to leverage some transactions for their own benefit. This could include extortion or bribery within the company, or when working with external parties.
2. Asset Misuse
You know that the assets you procure in your company are valuable because you pay for them. Employees may steal or misuse resources that cost you. Check your accounting records to identify any employees asking for reimbursements on false expenses, or even direct theft can be considered under this category.
3. Online Fraud
Have you ever received an email asking you to click on a link to access your bank funds? This could be a phishing site or a scam email. These should be deleted as you may provide accounting information to an online fraudster. A strong antivirus can offer the protection you need.
4. Financial Statement Fraud
Do you know all your suppliers by name? As a business owner, you must do your due diligence and check that the details in your financial statements correspond with the suppliers you have on file. Ensure no one has the privilege to change or update your financial information without your knowledge.
5. External Fraud
The people who have access to your accounting information may be able to make changes that affect your business negatively. Pay close attention to who has access, especially if they can change or update any transactions. Set up alert systems so you are notified immediately if any unauthorized financial transaction occurs.
If you suspect that you are a victim of business financial fraud, the first thing you should do is stop further payments. Review all your accounting documentation and highlight any information that causes suspicion for further investigation. Where necessary, change your passwords to limit all who have access to your financial information. Should you confirm that fraud has taken place, report it to the relevant authorities.
By understanding potential financial fraud, you can save 5% of the money you earn each year. Get financial fraud detection assistance to help you determine if there is any financial fraud in your business. Schedule a 15-minute call with an expert financial advisor today for a free discussion on how to stop financial fraud before it occurs.
