America's National Pastime is not being played at places like Comerica Park. It is being enjoyed in offices like yours from coast to coast. That's because fraud has replaced baseball as the most popular sport in the United States.
A recent report from the Association of Certified Fraud Examiners (CFEs) presents staggering numbers. Six percent of total revenues in American business are lost as a result of fraud and abuse. It is not just happening at companies like Enron and WorldCom. Small businesses often are hit hardest by white-collar crime. In fact, the average scheme costs a small business $127,500 in losses.
Most frightening to small business owners is the portion of the report that outlines who is most likely to commit fraud in the workplace. Chances are that it is your most trusted employees. Losses caused by perpetrators older than 60 are 27 times higher than losses caused by employees 25 and younger. Frauds committed by managers result in median losses of $250,000--more than four times the loss caused by non-management employees.
So, what can you do to prevent fraud in your workplace? Don't wait to take action until it is too late. The average fraud scheme lasts 18 months before it is discovered. It is up to you to put programs in place, so that your employees will not have the opportunity to commit fraud where they work.
One mistake business owners commonly make is waiting until after a fraud scheme is revealed to take preventive action. An experienced fraud examiner will be able to work closely with you to examine the opportunities for fraud that currently exist in your business. This audit will closely examine the vulnerability of the systems in your business. The CFEs' report lists the following tactics as the most effective ways to reduce fraud losses:
* Internal audits.
* External audits.
* Background checks of employees.
Look for loopholes
A careful examination of your revenue, payments, purchasing, inventory and payroll systems could reveal loopholes in your systems that could be exploited by employees who, given the opportunity, could rip you off.