November 12th to 18th marked the 22nd anniversary of International Fraud Awareness Week. Effectively preventing fraud in your organization takes everyone doing their part to establish an open culture of awareness and security. Although fraud prevention should be a year-round priority, the week is a great reminder of the prevalence of workplace fraud, the many forms it comes in, and how many times it still goes unaccounted for. With the right tools and guidelines, you can keep your business safe and shielded from fraudulent activities.
To commemorate International Fraud Awareness Week, let’s take a look at three essential practices that can help combat workplace fraud minimize future risks.
Updated Training
Ongoing anti-fraud training is needed to keep employees educated and aware of new threats. When was the last time your fraud awareness training was updated? The landscape for fraud is constantly evolving along with technology. Easy and effective practices that can help prevent fraud include strong internal controls, fraud hotline reporting tools, annual training for all employees on fraud risks, and easily accessible trends and resources.
Fraud Ethics at the Top
Fraud ethics should start at the top of your organization. Is the tone at the leadership level one of honesty and integrity? Would your top management do the right thing if no one was looking? Indicators of effective guidance include instilling code of ethics policies, communicating those policies to the entire organization, and having an open-door policy and reporting mechanism, such as an internal fraud hotline, for all employees to report potential fraud and/or fraud risks. An independent assessment of your organization’s culture toward fraud and ethics policies is a great way to evaluate where you stand and where improvements can be made.
Strong Internal Controls
Internal controls are another important component to minimizing fraud risks. Strong internal controls can be achieved in a number of ways, but common methods include establishing a code of conduct, regularly performing audits, and ensuring management is involved where needed. It’s also a great idea to have a checks and balances system across key work processes or roles who handle sensitive information. The most susceptible areas of your business to keep an eye on are cash receipts, inventory, new vendors, and payroll. No singular team member in these areas should own the entire process of a crucial task — there should always be an opportunity for other team members to assess and review work if suspicious activity arises.
Making fraud prevention a business priority doesn’t have to be intimidating, nor does it mean creating a whistleblower culture in the workplace. At the end of the day, it comes down to ensuring your employees and business are safe and that team members not only feel empowered to speak up if needed but also have the tools to do so.
Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.
