Note: Running Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the Entrepreneur’s Playbook page of the PKF Texas website.
There have been several high profile cases of fraud in the news in recent years. How do you take the steps to reduce the opportunity for fraud in your organization?
The most common methods of discovering fraud were tips and by accident, followed closely by internal audits, investigations, and internal controls. Tips from employees, vendors, and customers made up over one-third of the discoveries.
The most effective method of reducing fraud in your organization is by creating a culture of integrity and high ethics among employees at all levels. This is initiated by the senior executives/owners setting the tone at the top. Create the expectation that fraud will not be tolerated. Develop a code of ethics and conduct that employees are required to sign and adhere to.
Review your antifraud processes and internal controls and develop a strong oversight process. These two activities go hand-in-hand in sending a strong message to potential perpetrators that you are doing everything you can to reduce the opportunity for them to commit fraud upon your company.