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Fraud Prevention Tip #6: Blow-Up Flawed Beliefs

Just before lunch at a full-day Fraud Risk Management Skills training program, Jackie raised her hand. And boy did she raise a tough point!

All she said was, “Most of our managers simply don’t believe we have a problem with fraud. They believe that’s a problem other companies have. Not us. What can we do to help them believe the threat is real?”

We held off on further discussion until we returned from our meal. And then took the issue of ‘flawed fraud beliefs’ head on. Here’s why:

Beliefs lead to actions. Flawed beliefs lead to flawed actions.

Here are five beliefs I hear far too often in my work with clients.

SEMINAR BY JOHN HALL| 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.

SEMINAR BY JOHN HALL| 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.

When you don’t believe you have a problem, what’s the likelihood you’ll pay any attention to it? Your management team must believe – and we have to show them why. Just because they don’t know it has happened doesn’t mean that it hasn’t. When I ask anti-fraud experts how much organizational misconduct and wrongdoing goes undetected, they say the same one-word answer: MOST! Follow the wisdom of these leaders. Assume there’s fraud, prove there isn’t. As my clients have found for over 30 years, you’ll be surprised by the results.

While this may be a comforting thought, it simply isn’t true. At best, controls deter some types of fraud, and strong controls cause someone intent on committing wrongdoing to go elsewhere and victimize others. But prevent? Not even close. Here’s why: everyone who has ever committed wrongful acts has found a way around controls. And that’s a fact.

Perhaps they do. Perhaps they don’t. If they do, congratulations! You’re in the very small minority of organizations. Less than five-percent. But the fact is most employees have never been told what to do. Not in a detailed manner that shows them exactly what wrongdoing and fraud looks like in the documents they see on the job. Show them what it looks like, use specific examples, and make sure they know what to do when anything looks funny to them. Skilled employees are our best line of defense. Give them the information they need to be effective.

This one is my favorite flawed belief. In 25 years of interviews and over 1,500 fraud prevention skills training sessions, employees say the same thing. “Why did our leaders take so long to talk to us about this?” Or worse, “Why did they wait until we had a major crisis to bring it up and ask for our help?” Know this one thing to be true: employees everywhere want to help. All we have to do is ask.

This belief is absolutely flawed. I’ve researched it. I’ve talked to hundreds of fraud experts. And I’ve handled too many cases to count. Here’s what I have to report to you. All people and organizations change over time. All have the inherent potential to commit wrongdoing when placed under enough pressure. Aren’t you always surprised when one of the trusted long-term employees or suppliers is the one who does it? Shouldn’t you be surprised it’s them???

Have you heard these or similar thoughts expressed by your managers or clients? If so, don’t sit quietly: you have to blow up flawed beliefs with facts.

Give examples, provide statistics, engage in fact-based discussion about what has or could go wrong. Debunk flawed belief about fraud risks. Break down the belief barriers that block effective anti-fraud action. Get started today.

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.”