Fraud is an issue impacting Australian businesses of all sizes. Thirty per cent of Australian respondents experienced more than 100 incidents of economic crime in 2016, compared to only nine per cent of global respondents, according to the 2016 PwC Global Economic Crime survey.
Fraud has a high economic cost for small businesses too. The PwC survey found 30 per cent had suffered more than $1.4 million in losses as a result of fraud.
Small business are particularly vulnerable to fraud. Their size and limited resources mean it’s important they’re actively vigilant to guard against becoming victims, said QBE Fraud & Investigations Manager Chris Frost.
“The truth is that it can happen to any business in any industry,” he explained. “And some businesses may be a bit uncertain about where to start when trying to protect their business against fraud attacks.”
Frost has some tips for businesses to help them avoid becoming a victim of fraud.
Establish a code of conduct
This sets the tone from the top. A code of conduct outlines and communicates workplace rules and repercussions. This means employees can clearly understand and comply with the code of conduct put in place.
“Business should also require written acknowledgement that their employees have read the code of conduct,” said Frost.
Putting controls in place
Establishing a robust control environment will help to protect your business against fraudulent activities and there’s a number of key questions for business owners to consider.
“Does the business have suitable segregation of duties so the person who reconciles your bank statements can’t enter or modify transactions in the accounting system?” said Frost.
“Does the business require dual authorisation of large payments to give a second check before releasing payment?” There should also be rigorous key control and system access, especially for departing employees, he added.
“It’s important that businesses hold regular training sessions about how to identify fraud and what measures they should take if they are concerned about certain activities,” Frost said.
Training should provide a guide for people on expected use of company confidential information, such as financial data and employee and customer information.
Trust your gut
“If there are suspicions, look into it,” Frost warned. A healthy level of suspicion may be the difference between protecting businesses or possibly becoming a victim of fraud.
Report with confidence
Employees need to feel safe when reporting suspected fraudulent activities. “So businesses should think about implementing a secure channel for staff to report suspected fraudulent activities, such as a whistle-blower hotline or email,” Frost suggested. Employees should also be given the option to report suspected fraudulent activities anonymously.