Fraud Prevention

Fraud prevention is an essential component of any corporate risk management program. Limiting the opportunities for bad actors to commit illegal activities is necessary. To achieve this goal, various protections can and should be implemented. These include formal fraud risk assessments, surprise audits, mandatory job rotation/vacations, internal audits, financial statement audits, and anti-fraud policies. When updating your program, it is essential not to forget about fraud awareness training. According to the ACFE Occupational Fraud 2024 – Report to the Nations, it was found that training on the risks and costs of fraud helped reduce related losses and ensured schemes were identified more rapidly.

Earlier this month, the Association of Certified Fraud Examiners (ACFE) issued Occupational Fraud 2024: A Report to the Nations. This is the 13th installation of the largest global study on occupational fraud and includes information about the costs, schemes, victims, and perpetrators of fraud. To limit the potential for criminal activities and financial loss, management needs to regularly evaluate and update fraud prevention programs to ensure maximum effectiveness. The findings contained in the report, including changes to how tips are reported, should be carefully considered.

According to the Occupational Fraud 2022: Report to the Nations, tips are one of the most common ways that fraud is identified. This data point reflects the importance of implementing a whistleblower program as part of fraud prevention efforts. Yet many questions often arise about how to effectively manage a hotline. The ACFE recently released  Building a Best in Class Whistleblower Hotline Program, which provides important benchmarking and best practice information.

Fraud is a persistent risk that many business owners and executives need to manage. The unfortunate reality is that employees, vendors, or suppliers, may successfully commit fraud without proper prevention controls. Even then, many organizations have fallen victim to bad actors due to the ability to circumvent or compromise detection. This is especially true when it comes to fraud involving long-time employees or senior executives.

Fraud is an ever-present threat that Atlanta businesses need to carefully guard against to ensure the organization does not lose thousands of dollars to bad actors. Although it can be difficult to believe a manager or employee would commit such activities, the unfortunate reality is that it happens more than most want to admit. To limit the potential for criminal activities, it is essential for organizations to implement anti-fraud controls and conduct periodic reviews to ensure maximum effectiveness.

With median losses of $203,000, the construction industry ranks fourth among two dozen industries in the cost of damages arising from fraud. The nature of the work makes it an attractive target for bad actors. The confluence of long project lead times, multiple stakeholders, and participants, lots of moving parts, and different job sites all contribute to challenges in preventing and detecting fraud.

Fraud is a persistent threat that severely impacts the financial performance of an enterprise. When it is discovered a trusted employee, staff member, or executive has been stealing money, products, or services, it can have a lasting effect. This can manifest in the form of damage to the brand, or worse yet, adversely impact employee trust. For this reason, many companies in Atlanta and across Georgia regularly update fraud prevention programs. To help with this task, the Association of Certified Fraud Examiners (ACFE) published the 2020 Report to Nations – Global Study on Occupational Fraud.

The COVID-19 pandemic presented several and significant challenges for many Atlanta nonprofit organizations. The stay-at-home orders combined with social distancing rules not only impacted daily operations, the ability to deliver programs and services, but also had a devastating impact on revenue generation. In-person fundraisers, annual events, award programs, and more, which generate needed funds were scrapped requiring many to heavily rely on online efforts.

In a time when businesses are struggling financially from the persistent COVID-19 pandemic, many continue to find new paths to profitability when managing government orders. For some this has meant a transition to a remote work environment while others have had to make more significant changes to operating hours, location layout, and employee/customer safety practices. Although the impact varies, it is no secret that the pandemic is exacting a toll on many companies.

Fraud is one of those unpleasant business issues that many would rather not discuss. For those who have fallen victim to fraud, it can be a challenging topic while for others they would rather not give attention to something which has never happened in the business. It is understandable why it is not a popular topic in the boardroom, but it is one that businesses of all sizes need to carefully consider.