Privately owned companies are the primary target for financial fraud. According to a survey that was carried out in 2010 by the Association of Fraud Examiners, 42% of all the cases that were recorded happened in privately held business organizations. The majority of the fraud cases happened in business enterprises that had less than 100 staff members. What is even more astonishing is that the average fraud in a private company continued for about 18 months before detection. The average loss for such companies, according to the survey, was estimated at $231,000 for every case.

Most companies in the United States are now experiencing ‘back office’ and other types of fraud with the small to medium-sized enterprises being the hardest hit. Experts in fraud have said that the main causes for such cases include the simple complacency in such organizations, cutbacks that have done away with the checks and balances in many businesses and the ongoing recession. Some of the most common back-office financial fraud schemes include the creation of fake vendors, the billing for goods and services that do not exist and taking kickbacks from the vendors who work with your company. In this article, we are going to discuss the ways through which a private company can protect itself from fraud.

Employ checks and balances for the company’s financial system

It is always critical for any business organization to do an internal review of their finances on a monthly basis. Ensure that the payments for all goods and services march the invoices that have been delivered to the company. You can also hire a PCI compliance services provider to do an audit of your credit and debit cards. It is critical to check if there are any missing documents in the financial transactions that have taken place over a specified period. A company that runs random audits of their books of accounts or hires third-party audit firms to check their financial status is considered more secure. These gives a good sign to employees that the company management is extremely serious about financial fraud. It also serves as a deterrent for any potential fraudsters.

Practicing web awareness and protecting the company’s computer systems

Any company that is complacent about cyber-security may end up paying dearly. Every computer system in the company should have the latest antivirus, firewalls and anti-malware software installed. Such software should be updated on a regular basis to increase protection. The company’s IT department should also be wary of phishing schemes that try to get confidential data from supervisors, employees or even the company’s directors. Phishing schemes often take the form of an email that appears to be from a bank or any other financial institution such as financial technology service providers. However, most of these emails are from fraudulent sources and will defraud any unsuspecting individuals. Most of these scams are easy to spot. However, there are some that are very enticing and may seem to come from a legitimate source.

Secure hardcopy documents that have sensitive information

It is important to realize that your company is not only susceptible to fraud from the digital world. Company staff and other data thieves can steal your checks, credit cards or debit card information and even the company mail. Company financial statements that are in hard copy should be stored securely or shredded if necessary. Today, most banks, insurance companies, and other financial entities let you opt out of getting hard copy statements. That is one of the security measures that your company should also take into consideration. Photocopiers are considered by many to be innocent. They pose a severe threat to an organization’s financial information. Most of the copiers that came out of the production line after the year 2002 come with a hard disc that stores a copy of every document that has been emailed, scanned or duplicated. When a company wants to dispose of their copier, it is of utmost importance to have the hard disc removed or formatted. This will protect the company information from falling into the hands of fraudsters.


by: Sia Hasan