Fraud Advice

According to the Federation of Small Businesses (FSB) some 20% of all crime takes place on business premises. When you think of all the theft, murder, drugs and the like, this is an awful lot of crime!

The reason of course is that businesses are the target for all forms of fraud – employee fraud, creditor fraud, supplier fraud, Internet fraud…the list can go on. You should not wait until your business becomes a victim as it inevitably will at some point, do something about it now.

Apart from the obvious security issues for your assets, you need to put together a fraud reduction strategy that will help protect your business from various types of fraud, phishing, pharming, identity theft plus hacking and virus threats to your IT systems.

Your data needs protecting also. Even apparently simple information such as your customer lists are valuable and you do not want your employees giving it to your competitors. The data can also be lost through burglary and criminal damage to your premises. Think of the effort that would be required trying to recreate this information.

Remember to vet your employees when recruiting. You want trustworthy workers who will not put your business and assets at risk. Resumes very often contain falsehoods, and at best exaggerations. Make sure you take up references, check periods of employment and question what an applicant was doing in a “gap” period. Perhaps they were doing time at Her Majesty’s pleasure for fraud! Yes fraudulent employees do commit the same crimes time and time again, moving from one complacent employer to another.

Complacency is the name of the game when it comes to fraud risk. Although it does not always pay to be overly oppressive in your anti-fraud policy and cause resentment and even fear amongst your staff, a tightly controlled work place will undoubtedly prevent the fraudster striking or at least make him think twice before having a go.

Mark Jenner is a forensic accountant and fraud expert advising companies on cost effective ways of preventing fraud.

I recently wrote a post on my earlier blog site (which has unfortunately disappeared along with my older articles into my hosting server’s archives!) commenting on the state of the world economy as we draw towards the end of 2009 and how it will be effecting the level of frauds that are being discovered and investigated.

I concluded that we fraud investigators should be getting very busy as a result of the recession, along with insolvency practitioners and those who give advice on cost cutting and business turnaround.  Whilst there is some general activity increase particularly in London in the UK the great wave of new fraud cases has not yet broken. In fact the work load has been going up and down over recent months  but definitely not flat out or gaining momentum.

The initial worry was that my own portfolio was struggling, but this is not the case. I have been reasonably busy given one or two changes I have been making to my marketing efforts and then there is the increasing competition it seems! A number of recent tenders have been lost on price and this is one area where the recession is biting, in areas of civil investigation. Others are turning to fraud to fill in their shortfall. This is coupled with extreme pressure on public sector spending where certain agencies and regulators outsource their investigation work.

The word on the street from a number of my more frank and well known sources is that it is generally quiet.  From a couple of my insolvency sources it seems that the floodgate of businesses poised to go under is about to burst – whether this is before the end of the year or early next year we can only surmise.  This opinion is supported by a couple of contacts I have in the banking arena. They say that there is a lot of desperation building up (individually as well as for businesses) and the banks are not yet back to a position to assist fully.

Added to this are the reports from some of the economists that even if we are in or near the depths of the recession – it will be a long slow climb out. This will mean the weaker companies will go bust as the market place “cleans” itself up and that yes, frauds will be surfacing. It also means that the drivers for the fraudsters to start committing acts of fraud will be a strong as ever and this in turn means new cases will continue to reflect the present economy well into the next decade.

So my view remains the same. We will start to see a rise in fraud coming to light – as well as businesses going into some form of insolvency procedures – a rise that may well begin soon and keep on going for some time to come!