Each day, business owners are faced with significant financial decisions that can ultimately harm or benefit the business–especially when fraudulent actions are in the mix. The corporate fraud attorneys from Azrael, Franz, Schwab & Lipowitz discuss critical tips to help businesses avert corporate fraud.
Businesses are always at risk of interacting with individuals who intend to defraud or deprive the company of funds. While no company, even with robust internal controls, is entirely protected from fraud, there are several precautions that a business can implement in order to avert corporate fraud as best as possible.
- Avoid extending credit to the unknown. Make inquiries, request references and determine credit value by obtaining a real credit report for an individual or company with whom you are doing business. Credit checks are invaluable as a means for curbing fraud and confirming identities.
- Implement and update privacy policies. Without privacy policies and contracts, valuable information that should otherwise be hidden, is at risk for intentional and unintentional distribution. Personal information of your customers, clients and employees needs to remain secure in order to prevent identity theft.
- Evaluate risk. When services are outsourced or moved from department to department, it is vital to take note and recognize risk points. With total transparency, know what is performed by all individuals and companies you do business with, both internal and external.
- Regularly complete bank statement reconciliations. If a check is altered, lost or stolen, you will be able to rectify the situation before it causes issues for the business. In addition to noticing outside suspicious activity, bank statement reconciliations will allow you to see whether or not checks have been written on the business account that should have not been, or if the bank has made any mistakes.
- Implement detection strategies. Executives often use surprise audits, internal audits and management reviews to help ensure that all procedures are being followed and that the right questions are being asked and answered at all levels.
- Take action immediately. If fraud is detected, initiate a rapid-response plan with strategies for investigating, reporting and prosecuting fraud or corruption. It is especially important to have an experienced corporate fraud attorney on your side if fraudulent activity transpires.
- Follow up. Procedures for following up after fraud occurs are critical to seeing that questionable behavior is not discounted. Once fraud has occurred, it is particularly important to reevaluate existing controls, or ensure that new controls are put in place to prevent such from occurring again.
Not every business is at risk for corporate fraud that makes headlines, however every business is still at risk. Because of this, it is vital to implement tactics and mechanisms to prevent fraud, take action when needed and always follow up. For more information on preventing corporate fraud or what to do in the event of such, contact a corporate fraud attorney from Azrael, Franz, Schwab & Lipowitz.