Detecting business fraud is the first step in resolving this type of problem. Business fraud is a common concern of all businesses. It is the reason why companies spend a lot of money in system security and surveillance system so they can prevent losses due to these types of malicious schemes. However, because the form of fraud varies depending on numerous factors, it can be hard to find a solution that can solve or prevent all types of business fraud.

This is where early fraud detection is crucial. Detecting fraud at an early stage gives you the chance to reduce its impact or damage. It also increases your chance of catching those responsible and recovering your losses. To give you some idea on how you can detect fraud, see the tips below:

Tips for Detecting Business Fraud

  • Change in Behavior

One of the key indicators that someone is up to no good is their behavior. A sudden change in behavior includes staying late in the office without a valid reason, frequenting departments or areas that are not relevant to his assignment, being defensive and irritable, and sudden change in work ethics such as dependability issues.

  • Reconciliation Issues

Reconciliation issues usually indicate missing items or money. Business fraud schemes are usually conducted for financial gain. This is the reason why you have to be wary of a missing deposit in your bank statement or missing cheque from your checkbook.  Unexplained cheque issuance should also be monitored as this could indicate a bogus expense or payee.

  • Sudden Increase in Purchases

Increase in expenses without any reasonable explanation could also indicate fraud. Your company’s purchasing officer should be able to explain a sudden spike in inventory and supplies order. This too could indicate business fraud.

  • Reimbursements and Representation Expense

This aspect of business is one of the most exploited areas of business. Some employees take advantage of this privilege by charging irrelevant or personal expenses to the company. Checking the nature of the reimbursements should reveal any fraudulent activities.

  • Frequent System Failure

Frequent system failure could be an indicator of fraud. Fraudsters usually attack the company’s system in order to evade detection. Using system failure as an excuse, fraudsters are able to delete or remove evidence of their malicious activity.

  • Sloppy Report Outputs

Incomplete and late report submission can also be utilized as a means to detect fraud. An employee could intentionally be submitting a sloppy report to keep you from discovering unauthorized transactions or missing money from the company. Fraudsters can also use delaying tactics so they can have enough time to manipulate the details of the report so you won’t catch them red handed.

The details above are just some of possible indicators of fraud. Although these irregularities may not automatically mean that there is a fraudulent activity going on, it is still in your company’s best interest to take a check and find out what’s going on. Actively checking or monitoring your company’s standing and activities is the best way to detect business fraud.

 

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