3 Key Components of an Anti-Fraud Program

Somewhere out there, your business is probably being targeted for fraud. Internet-based hackers, international organized crime organizations, and even a small percentage of employees all see your business assets and information as too tempting to ignore. But what should you do to deter these barbarians at the gate – or already inside your business?

Managing business fraud risks requires your daily attention. It’s a ‘cat and mouse’ endeavor where the smarter we get, the harder they have to work to get us. While there are many prevention and deterrence steps you can take, here are three critical components of any business anti-fraud program.

• Build a culture of honesty within your organization. Ethics starts and ends with the actions of leaders. From the boardroom to the factory floor, every leader must not only talk, they must demonstrate exactly what ethical behavior looks like in their business habits.  Formalize the rules of acceptable behavior in a code of conduct. Be clear about what is not allowed as well. Address confidentiality, harassment, use and protection of intellectual property, avoiding conflicts of interest, and other ethical issues. Be clear about relationships with third-party suppliers, customers and contractors.

• Perform a meaningful fraud risk assessment, and brainstorm how to mitigate fraud risks. Fraud risk assessment starts with an open discussion of what can go wrong. Recruit every employee into the brainstorming process. Address theft, manipulated financial and operating results, and shadow deals with third parties. Make sure every employee knows what can go wrong in their areas of responsibility, and tell them it’s their job to make sure fraud doesn’t happen on their watch. Help them implement or strengthen anti-fraud controls. And openly recognize their positive deterrence behavior.

• Provide useful anti-fraud skills training. Creating a culture of honesty and ethics is step one; step two is fraud risk brainstorming. But none of it matters without useful anti-fraud skills training. Many organizations speak to their staff about fraud awareness. But if you are expecting them to fight fraud, you have to go much further and show them exactly what fraud looks like in the transaction records they see every day. There’s simply no short cut to meeting this essential need. Yet this is the one step that most business organizations skip. Provide anti-fraud skills training in a classroom setting, in small staff meeting discussions, in organization newsletter articles, and using webinar, conference call and other simple technology (Skype, Apple FaceTime and others). Most effective of all but often overlooked is one-on-one coaching of staff by supervisors at every level. Don’t keep fraud examples hidden from your team; bring what can go wrong out into the light where all can learn and react appropriately. Help them be successful in meeting your fraud risk management objectives. Encourage them to speak up and make it as safe as possible to report suspicions.

Obviously these three ideas are just part of a comprehensive anti-fraud campaign. But they are three critical components you must have in place.

If you have questions about what you should do to fight fraud exposures in your organization, just let me know and we’ll talk it through. Call me at (312) 560-9931. Or email John@JohnHallSpeaker.com and we’ll get the discussion started.

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”