Fraud Prevention Tip #48: Suggestions for Small Businesses, Small Government and Not-for-Profits

The Anti-Fraud Toolkit Structure
In 9 modules, more than 6 hours of recorded video lecture, over 250 PowerPoint slides, and many practice ‘To-Do’ action items and practice tools (downloadable in each module), you’ll get the step-by-step, turn-by-turn instructions you need to take action right now. Short on theory and long on action steps, the lectures and tools in each module will enable you to take confident, effective action by building on the successes I’ve witnessed in my clients all of these years.
You’ll also get guidance on what not to do in the fight against fraud – to help you avoid common mistakes, focus your precious limited energy, and avoid undermining your own efforts through inefficiency and uncertainly!

Most smaller businesses, local governmental entities, and not-for-profits face the inherent risk of insufficient staff and limited control resources. These special challenges require extra effort by anti-fraud leaders. Here are seven ideas that will help.

• Create a written Code of Conduct that addresses routine and non-routine situations staff will encounter in performing their work. Provide examples, short cases and answers to Frequently Asked Questions. Be wary of boilerplate terminology. Focus instead on meaningful real-world guidance for conduct.
• Due to limitations in staffing and inadequate segregation of duties controls, managers should compensate by spot checking and re-performing the work of subordinates. Make this ‘quality check’ a daily habit.
• Require that approvers carefully review all disbursement documentation prior to approval. Verify details, ask questions, and when in doubt, choose to follow up until a valid verifiable conclusion is reached.
• Have organization bank account and credit card statements sent unopened directly to the chief executive. This executive should review all statements in detail as soon as they are received.
• Verify the existence and legitimacy of all first-time payment recipients.
• Make everyone take uninterrupted vacations or other time away from their jobs. Have other staff fill in for them and complete their work while they are away. This practice builds skills and acts as a deterrent to wrongdoing.
• You simply must perform meaningful criminal background checks on employees and higher-risk volunteers. There’s no easy way around this one. Those terminated for cheating at prior employers know they need a new job right now. No delay. And prime targets for new jobs for these folks are the smaller business, governmental entity or not-for-profit that everyone knows has limited resources and staff to check backgrounds.

Comply with the privacy, anti-discrimination and other applicable laws. Beware of blanket policies that prevent hiring those with prior criminal records. Get competent legal advice and find a way to get these reviews done

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 38-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.”