Closeup portrait of stressed, overwhelmed, sad elderly business man, old accountant, broker bank worker troubled by budget numbers, unhappy with contract, thinking worried isolated on white background

Why Fighting Fraud is Important to Business Success

The presentation was fairly routine. The Board members and C-Level executives all listened patiently while I outlined the key components of a suggested Anti-Fraud Campaign for the organization. A few routine questions were asked, a few nods of agreement around the table, and a word of thanks from my sponsor the Chief Counsel. My allotted ten minutes were up and it was time for the next item on the agenda.

Then everything changed.

A voice from the back right corner of the long table,

“Before we move on, I have one last question to ask the group. Why don’t we just budget for acceptable fraud losses and focus our time and attention on more important business matters.”

Dead silence as every eye in the room turned in my direction.

What a wonderful moment. I LOVED this question! It showed at least one Board member was giving the issue of fraud the deep thought it deserved.

I picked up a marker and pulled the flip chart close. Here’s what I wrote and said in reply:

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How to Prevent Business Fraud: 8 Ideas That Work The goals of anti-fraud efforts are prevention and immediate detection. While no anti-fraud system is foolproof, the 8 ideas in this program are critical to managing fraud risks in your business. And there is a cumulative effect – the more of them you apply in your business, the greater the chance of success. Providing turn-by-turn instructions for business leaders and owners, this program is short on theory and long on practical ‘how-to’ instructions on what you should do and what gets in the way. You’ll benefit by building a stronger defense against the risks of wrongdoing, misconduct, theft and outright fraud. Using the tools, checklists, talking points, and sample anti-fraud policies included in the program, you’ll be able to apply the ideas right away with minimal cost and maximum effect.

Reason 1 – You proactively fight fraud because it’s the right thing to do. You simply do not budget for wrongdoing as it tells everyone, “This is the tolerable amount here.”

Reason 2 – Effective Fraud Risk Management is a largely untapped profit-improvement opportunity. Start by calculating current losses in a Fraud Loss Scorecard (usually at least 1% of revenue), set up a comprehensive Anti-Fraud Campaign aimed at cutting losses in half in 18 months, and recruit every employee and business partner into the effort. Result: some fraud is prevented, and fraud that does occur is found much more quickly. Either way every dollar saved flows directly to income.

Reason 3 – The employees deserve it. Every employee in every organization wants to come to work every day believing they work in a safe, honest, highly ethical organization. The role of leaders is to provide the environment where these critical expectations are met through leadership words and deeds.

And if that isn’t enough,

Reason 4 – It will be embarrassing if you don’t actively fight fraud. Something major will go wrong, it will become public, and you will be held accountable for your leadership actions.

I finished my little speech by asking the Board if they agreed. (An outsider like me can get away with that!) Of course, they all did.

It’s important to understand that fighting fraud isn’t extra work. It’s core work. Every executive, manager, supervisor and staff member should be taught the skills of Fraud Risk Management. These aren’t skills employees show up with on day one. They need to be taught – and the Board needs to require meaningful ‘how to’ anti-fraud skills training so that management takes action.

As I capped my maker and packed my presentation tools, the Audit Committee Chair instructed the CEO to get started on training employees. The rest of the Committee unanimously approved.

Often the message is better heard when it is delivered by an outsider. If you think that might work for you, give me a call and let’s discuss your unique needs. I’m here to help you be successful. All you have to do is ask.

 

John J. Hall, CPA

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.”