The amount of fraud being perpetrated against businesses is getting worse, both in terms of the number of instances and the amount of money that is being lost, and some of that can be attributed to worsening economic times, according to research. Almost half of the companies around the world surveyed by PriceWaterhouseCoopers in 2009 reported that they suffered one or more instance of economic crimes. The survey, which involved 3,000 executives of businesses large and small in 54 countries, found that 88 percent of U.S. companies that reported some type of fraud also reported declines in financial performances. In addition, three-fourths of the crimes against businesses in the U.S. were carried out by insiders.
For small and mid-sized businesses, the vulnerability to fraud can be compounded because of the sometimes informal nature and the fact that fewer staff members can result in less oversight -- and a lack of checks and balances.
'Small businesses tend to be very informal in nature. A lot of times they're either formed with friends or family members, and all the formalities are not in place as they would be in a larger business,' says Elena N. Lougovskaia, co-founder of Lougovskaia Boop, LLC, a law practice in Cleveland, Ohio, focused on business law and commercial litigation. 'Employees wear many different hats and perhaps decision makers should be separated from people who sign the checks or one person should be responsible for signing check and a separate person should be responsible for accounting, processing invoices, and purchasing.'
The following pages will cover the types of fraud against business, how to detect fraud in your business, and how to set up policies and procedures to prevent your business becoming a victim of fraud.
How to Protect Your Business against Fraud: Types of Fraud against Business
The media is filled with stories of consumer victims of fraud. But the reality is that businesses, especially smaller enterprises, are more often the victims of fraud than consumers. The types of fraud can vary wildly, from accounting scams carried out by employees to fraudulent returns from customers to data theft by outsiders. Businesses have less protection than the consumer and, in some cases, can be held responsible in a business fraud scheme, owing liability to banks, shareholders, insurers, credit card processors and other entities. New laws also hold businesses accountable for liability in the event of some types of fraud perpetrated by third parties, such as data breaches.
For over two decades, the financial experts of Alfa One Corporation Accounting Solutions in Tokyo, Japan have provided a one-stop financial-services source in management of business practice, tax and financial planning, accounting, transition, investment counseling and retirement planning consultancy especially for the dental industry in Malaysia, Tokyo and Hong Kong. Since our company started its operations, dentists have relied on our knowhow, expertise, and experience to help them attain their business and personal objectives with excellent results. Our well-trained staff of Certified Public Accountants, Certified Financial Planners, accountants and bookkeepers are ready to provide dentists the assistance they require on a day-to-day arrangement. We aim to enhance all our clients' financial productivity as well as the quality of life.