News & Resources

Detect and prevent fraud

Jan 14, 2011 Matt Roesly

When it comes to money, there is always the potential of mismanagement, misuse or misappropriation. Sometimes, unintentional errors occur. Other times, fraud has taken place. For business owners, it is important to be able to detect and prevent fraud before it rips a company apart. According to the CPA firm Greenstein, Rogoff, Olsen & Co., fraud is described as stealing money or merchandise, taking kickbacks or bribes from supplies or customers, providing false financial information to the government, creditors or investors, cheating on expense accounts or claiming overtime pay when it is not due. It can be hard to pinpoint exactly who might have the capability within an organization to steal in this way, but the CPA firm suggests that business owners watch for the warning signs. These include employees who seem to spend outside of their means, people with financial problems, and employees who have broken rules in other ways. To help prevent fraud, the Journal of the Connecticut Business and Industry Association advises business owners to set clear standards and provide an appropriate example and ethical tone from the top down. When hiring new employees, it is imperative to confer with their references and perform a background check. "The cost is far outweighed by the benefit," the organization explains.