Organizations around the world – both large corporations as well as small businesses – lose an estimated 5 percent of annual revenues to fraudulent activities, according to a study conducted by the Association of Certified Examiners (ACFE) with 42 percent of fraudsters being employees, 38 percent managers and 18 percent owner/executives. A great majority of this fraudulent activity occurs within the 23 million small businesses in the
“That’s a good deal of manpower and finance in the hands of companies with less than 500 employees,” comments Cynthia Hetherington, MLS, MSM, CFE, founder and president of the Hetherington Group (www.hetheringtongroup.com). “Small businesses in particular are extremely susceptible to employee fraud as they often lack the anti-fraud controls or policies found in larger organizations.”
November 11-17 is International Fraud Awareness Week and the Hetherington Group is urging businesses to take steps to minimize the impact of fraud by evaluating their employee screening process and by implementing anti-fraud policies and controls. The Hetherington Group offers the following tips:
- Small companies seldom bother with a background check on new employees, potentially inviting hackers, predators, and even convicted felons into the organization. Conduct a thorough background check that goes back over the past seven years on all employees before hiring to see if there is a criminal history.
- With a signed release, check their credit report for any fiscal irresponsibility. During an economic crisis it’s ok to have some financial stresses, but you wouldn’t want your comptroller to be filing for bankruptcy.
- Once the employee is being considered for hire, review their social networks for any items damaging to reputation, especially any past animosity against their former employer.
- Institute an employee policy that outlines expected employee behavior anytime they are representing the company, including any mention on their social networks.
Institute anti-fraud controls to monitor all employee activity including:
- Internal and external audits
- Management reviews and independent audit committees
- Fraud training for management and employees
- Mandatory vacation and job rotation
- Hotline/tip line and rewards for whistleblowers
“Fraud detection and prevention should be an ongoing initiative,” Hetherington continues, “and International Fraud Awareness Week offers a great opportunity for businesses to become aware and develop and review policies and controls to fight fraud and safeguard their livelihood from this continually growing problem.”
Cynthia Hetherington, MLS, MSM, CFE has more than 18 years of experience in research, investigations, and corporate intelligence. She is the founder of Hetherington Group, a consulting, publishing, and training firm focusing on intelligence, security, and investigations. Cynthia is also the ACFE James Baker “Speaker of the Year” Award Recipient 2012.
