Are You at Risk for Employee Fraud?

When we think of business fraud and corruption, we usually think of scandals at the top by large companies and big name people; Bernie Madoff and Enron come to mind. But in reality, small and mid-sized businesses are actually more susceptible to fraud, and the effects can be even more devastating.

Of course you never want to think that it could happen to your Maryland business, but it can, and it’s best to be prepared for it. We wanted to take some time today to highlight some of the things you can do to help prevent employee fraud.

Split Up Your Maryland Business’s Accounting Duties

Many small businesses only have one person who handles all of their bookkeeping and accounting, but this isn’t the best way to handle your accounting. By having only one person handle all of your financial files, you’re practically inviting them to “cook the books” or “skim some off the top.” You should have at least two people keeping track of all of your business’s financial information. The second person will act as a fail-safe and they will both keep a check on each other to ensure proper accounting process and employee behavior. Additionally, you can always outsource your accounting to an experienced and trusted Maryland accountant.

Audit Your Books With Regularity

In business, money is everything. It’s what decides whether you sink or swim. This is why it’s so important to keep a close watch on your accounts. By regularly checking your accounting files, you can help to prevent fraud and ensure that everything is on the up-and-up. Random non-scheduled audits can also catch any fraudulent activities. Someone who is stealing but knows when an audit is coming may have time to cover their tracks, but the random audit will prevent this.

Teach Your Employees About Fraud

You should train all of your employees about fraud, what the signs are, how to prevent it, and how to report it. Setting up an anonymous reporting system is also a great thing to do. Many employees have reservations about turning in a coworker, but are willing to do so anonymously. The bottom line is that your business should have a clear code of ethics, and your employees should be made aware of and agree to follow it.

Know Who You Are in Business With

When hiring a new employee or establishing a new business connection, you need to know who you’re dealing with. Running a background check on a potential hire could reveal a lot, and could prevent future fraud. Likewise, you need to make sure you’re only working with businesses whose code of ethics are on par with yours. As the old adage goes, if you lay with the dogs, you’re gonna get fleas. You want the people you’re working with to be of the highest professional and ethical quality.

Get Help in Preventing Fraud

While all of these tips will certainly help to prevent fraud, they are not the be all end all. The best way to completely prevent fraud is to work with an experienced Maryland accountant. Here at CFO Source, we have helped to safeguard many Maryland small businesses and know how to spot the signs of fraud. If you believe fraud is being committed at your business, or if you’d like to prevent it from happening, give us a call. Our experienced Maryland accountants are standing by, and are more than happy to answer any questions you may have.