Published on: 8/1/2014 8:56:21 AM Print | Font Sizes:  Normal Text Large Text

Proactively managing fraud — protect yourself with proper procedures

By: Laurie Bissonette

Laurie Bissonette, FCPA, FCA, is a partner with KPMG Enterprise. She can be reached at 705-669-2521 or
Laurie Bissonette, FCPA, FCA, is a partner with KPMG Enterprise. She can be reached at 705-669-2521 or

Fraudulent activities can be more difficult to detect within private companies, especially where prevention procedures and policies might not be as rigorously established as within larger organizations.

As a result, it may take longer to spot warning signs within a smaller company where people hold multiple roles or differing responsibilities—an average of up to 18 months. However, there are steps that you can take to minimize the risk of fraud occurring in your business.

While hopefully you work with trusted employees, this doesn’t mean that you should ignore the possibility of fraudulent activity taking place. Experience shows that fraud often stems from a personal need. There can be an opportunity to commit fraud when an employee holds a dual responsibility, such as both bookkeeping and purchasing, where there may be inadequate checks and balances.

There are many established operational policies that you may want to implement that can help protect yourself and your businesses. These policies should:

-analyze and review all expenditures;

-document rationale for all expense reports;

-review all bank statements;

-monitor company credit cards;

-ensure cash balances are reported accurately;

-conduct frequent physical inventories;

-segregate duties associated with bookkeeping; and

-include periodic reviews throughout the year.

In addition, preventative measures can help minimize that the opportunities for fraud. For example, you should:

-complete detailed background checks of employees;

-maintain a code of conduct including articulating clear policies regarding employee theft and repercussions;

-provide training programs to detect warning signs of fraud; and

-create a system for reporting suspicious activities.

As with any workplace issue, you should be proactive rather than reactive if you discover fraud. Establishing prevention procedures and developing anti-theft policies in the workplace may ultimately help you avoid the costly and time consuming process of investigating frauds and irregularities.

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