For you to be able to stay ahead of the game, you have learn the methods of preventing corporate fraud in corporate settings.

1. HRH. JOHN BABATUNDE LEE

2. Are you concerned about fraud or theft in your company? If YES,
here are 10 most perpetrated types of business fraud and 10
best ways to prevent them.
Types of Fraud in Business
According to the Association of Certified Fraud Examiners annual report, about
half of all small businesses experience fraud at some point in their business cycle.
And it will cost each business an average of $114,000 per occurrence. That is, a
small business loses around $114,000 during each occurrence of fraud. And that’s
big enough a loss to cause some businesses to close shop. Worse, the culprit in
most cases of fraud is a “trusted” employee.
Now, those statistics are staggering. And they only drive home the point that
most businesses are at the risk of fraud. So, as a small business owner you need
to do all you can to protect your business from fraud. You sure don’t want to be
ripped off by an employee who has no idea all you went through just to get your
business off the ground.
In order to protect your business from fraud, you need to first understand the
various types and forms of fraud that your business is exposed to. This
enlightenment alone can significantly help you figure out how to prevent the
occurrence of fraud.

3. Here are 10 common types of fraud that could destroy any business fast.
a. Theft of stock-: This is a time-honored way to make quick bucks. The culprit will
over time steal a number of items from the store or warehouse and resell them,
usually at ridiculous prices. You as the business owner won’t notice this for a long
time because the stock losses are usually within tolerance. So, if you run a retail
store or any other business that offers certain products for sale, you need to be
extra vigilant because your business is at high risk for this type of fraud.
b. Check tampering-: This refers to any scheme in which your employee steals
from the company’s funds by forging or altering a check on one of your
company’s bank accounts. In other cases, the employee steals a check that your
company has legitimately issued to another payee. To prevent this type of fraud,
ensure that all blank checks are locked up. Insist on time bank receipts and review
them carefully. And account for all checks, including void ones.
c. Billing fraud-: This is what happens when an employee makes your company
issue a payment by simply submitting invoices for fictitious goods or services,
inflated invoices, or invoices for personal purchases. So, the company ends up
paying the employee either in cash or with stock. You can prevent this type of
fraud by assigning the duties of invoice approval and check cutting/payment
issuance to different employees. Also, require signed approval for all
expenditures and review vendor listing periodically.
d. Skimming-: In this type of fraud, the culprit steals money from your company
before it is entered in the company’s financial records. Usually, the employee
accepts payment from a customer for a product or service but does not record
the sale, so all the money made from the sale is stolen. Preventing skimming is
easy. Just ensure that receipts are duly issued for each sale, and at the end of
each day, be sure to balance cash to total receipts issued.

4. e. Cash larceny-: This is almost similar to skimming, but in this case, the culprit
steals money from the company after it has been recorded in the company’s
books and records. Usually, the culprit steals cash and checks from daily receipts
before they are deposited in the company’s bank account. Less commonly, the
culprit steals outgoing check to a vendor and deposits it into his or her own bank
account. This is less common because it is easy to detect (since the vendor will
call to inquire). To prevent cash larceny, you must open all mail and stamp checks
on the back “for deposit only with your company.”
f. Payroll fraud-: A payroll fraud occurs when your employee prompts you to
issue a payment by making false claims for compensation. For example, the
culprit might claim overtime for un-worked hours or adds ghost employees to the
company’s payroll. To check payroll fraud, make it a rule that employees pick up
their paychecks in person at periodic intervals (so you can investigate any checks
not picked up). Also, require that all time cards be duly signed.
g. Bribery-: This is when one or more employees offers, gives, receives, or solicits
for something valuable for the purpose of influencing an official act or business
decision without your consent. For example, an employee can process inflated
invoices from a vendor and in turn gets 10 percent of the invoice price as a bribe.
Or an employee can accept payment from a vendor in return for leaking
confidential information about a competitor’s bid on a projects.
h. Manipulation of sales figures-: This is common among employees that are paid
a commission based on how much sales they make or those that must meet a
specific monthly target. They manipulate sales figures to reach their monthly
target or to get more commission than they are entitled to.

5. i. Expense reimbursement fraud-: This is what happens when an employee claims
reimbursement for fictitious or inflated business expenses. For example, an
employee sent on a business assignment to another country can claim additional
expenses that are fictitious or inflated.
j. Friendship fraud-: This is what happens when you get so close to an employee
that you entrust him or her with vital company documents such as blank checks.
Usually, such employees go undetected for a long time because you have trusted
them so much; you won’t believe they could backstab you.
10 BEST WAYS TO PREVENT FRAUD IN YOUR BUSINESS
1. Control your Greed-: Well, there is a popular saying that if something sounds
too good to be true, then it is definitely too good to be true. One thing that
pushes people forward in a deal even when there are warning signs all over that
deal is greed. I strongly believe that greed is the winning factor a con man always
looks out for. If you can control your greed, you will never fall for any scam.
2. Knowing who you are dealing with-: Don’t do business with anonymous
individuals. You must endeavor to find a seller’s physical address (not P.O Box)
and phone number. With internet phone services and other web based
technologies, it will be tough to tell where a person is calling from. Do an online
search for the company name and website, and look for reviews. If negative
experiences are being reported by people, you now have to decide if the offer is
worth the risk. After all, a deal is always good only if you get a product that
actually works as promised.

6. 3. Note that wiring money is like sending cash-: Don’t send money through
untraceable media such as wire transfer, Western Union or MoneyGram without
first verifying the authenticity of the deal and the individual involved. People wire
money as often insisted by Con artists, especially overseas, because it is closely
impossible to reverse the transaction or tracing the money. Do not wire money to
unknown people, especially to sellers who insist on wire transfers for payment, or
to any person who is claiming to be a relative or friend in an emergency and
wants to keep the request a secret.
4. Always read your monthly statements-: Scammers will always steal account
information and then run up charges or commit crimes in your name. Dishonest
merchants will bill you for monthly ‘membership fees’’ and other goods or
services without your authorization. Worst still, your employees will steal from
you and inflate the price of items purchased if they discover that you don’t bother
to go through the books. So invest time to scan through your financial records
regularly and when you see charges you do not recognize or do not welcome,
contact your bank, card issuer, or other creditors immediately.
5. Place a withdrawal limit on your bank account-: Yea, you can stem the growth
of fraud within your organization by placing a withdrawal limit on your account
and instructing your bank to contact you when someone tries to withdraw above
the limit.
6. Investing comes with a risk; never forget that-: If your are contacted with any
low-risk, high-return investment opportunities, please stay away. When you
receive a pitch that is urging you to act immediately, offers you a guarantee of big
profits and promises little/no financial risk, please take your money and run.

7. 7. Make sure that the staff handling account receivable is different from the
staff handling account payable.
8. Do not accept a check and wire money back-: By law, banks will have to make
funds from deposited checks available within days, but uncovering a fake check
can take weeks. You are responsible for the checks you deposited: if a check turns
out to be a fake one, you are going to be responsible for paying back the bank. No
matter how convincing the story, someone who overpays with a check is almost
certainly a scam artist so be careful.
9. Setting a clear standard-: The best way to help safeguard a business is to set
clear standards from the beginning. This involves an appropriate example and
ethical tone, starting from the top down. An employee manual can be of great
help in establishing the principles and values to guide your organization. An
employee manual levels the playing field and keeps the rules from becoming
arbitrary. The rule is applied to all. If someone is dismissed and you discover
yourself in court, the manual is capable of being a reference that will explain what
actions will warrant dismissal.
10. Checking Employees References-: Before hiring a new employee, always
check references and perform background checks that include past employment,
licensing, credit and criminal history. The cost of doing this is always far
outweighed by the benefit. For instance, as a business owner, you should be
cautious of hiring a bookkeeper or accountant with bad credit because the weight
of crippling financial duties could turn an otherwise honest person into a thief.
11. Secure your organization-: Make use of renumbered checks as this will enable
you to audit for missing checks. Also, checks clearing out of sequence could be
spotted more easily. All checks should be kept under lock and key, and the keys

8. should never be distributed. Other precautions include having a ‘’voided check’’
procedure and do not sign blank checks. All disbursements should be reviewed on
regular basis. Scrutinize, and then scan checks made out to suppliers you do not
recognize, checks made out to an amount for cash, checks appearing out of
sequence and cross check missing numbers.
12. Always be in control of who reviews sensitive documents-: Small business
owners should be in control of who first receives the bank statements and other
sensitive documents. It is not far-fetched for small business owner to have a
separate post office box for the purpose of receiving bank statements, customary
receipts or any other sensitive documents. This will assist to eliminate the
possibility that someone intercepts the mail first for the purpose of stealing or
covering up an earlier theft.
13. Do not send money to someone you do not know-: Do not send money to an
online seller that you have not heard of/or seen—or an online love interest who
asks for money. It is best to do business with sites and persons you have known
and trusted. If you purchase items through an online auction, consider making use
of a payment option that will provide protection, like a credit card.
14. Do not play a foreign lottery
15. Do not reply to messages asking for personal or financial information. etc.
16. Safeguard your payroll-: This is another chapter subject to abuse. Small-
business owners and managers should take the extra time to review every payroll
check personally. Although it is time consuming, this procedure will provide a
monitor to assure employees are being paid appropriately. This could be

9. especially important when a business has temporary and part-time staff. Although
is not always possible in a small business, certain obligations should be
maintained separately. For example, the person who ‘cuts’’ or is in charge of the
checks should not be the person who the authority to sign. The person opening
the mail should not be the recorder of receivables and reconciliation of the
accounts. Even a small business could take a step to separate relevant functions.
In conclusion, i believe the above listed precautions will go a long way in helping
you prevent fraud in your business, so take it seriously.