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Must Have Components of a Fraud Risk Prevention Program

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What are the must haves of a sound fraud risk prevention program? This question is often asked from us by our clients and small wonder why. Every organization needs one!

Just keep in mind though – a fraud risk prevention program needs to be carefully engineered for it to be of real use for the organization. No one needs a faulty fraud risk management program, right?

Fraud Prevention General Principles

Only the factors affecting fraud varies across various organizations, the risk stays the same since every business is vulnerable to fraud.

One of the general principles in fraud prevention is to assign the responsibility to a manager or a team of managers. What this does is that ensures that all sorts of activities within the organization will be assessed or evaluated for fraud risks. This is the initial step so to speak, and one that will determine the effectiveness of your fraud prevention program.

What’s next?

It’s all about communication! Once you’ve got a fraud prevention program, it is of utmost importance that this should be communicated to every member of your organization. This means e-v-e-r-y-o-n-e, from the mailroom to top level.

Fraud is a hidden risk, and it will remain that way. What you will be accomplishing by having a fraud prevention program is that you’ll be able to minimize your organization’s risk as well as have some solid steps to follow if someone discovers fraud. In case the program was not able to fully deter any fraud from happening, it should encourage whistleblowers to report occurrences of fraud.

Fraud Prevention Controls

By no means is this list meant to be a complete guideline, but this should give you an idea about what measures you should have in place to minimize the possibility of fraud.

Background Screening

Often thought of as a process only necessary for new hires, background screening should also cover those who are being considered for important positions or potential business partners; yes, even third party ones.

Anti-Fraud Training

Information dissemination about the fraud policies of your organization should be integrated into this.

Performance Evaluation

Even trustworthy individuals might get tempted to commit fraud. People who are in incentive-based positions and those who have been passed over for promotions are high-risk and hence, a fair, correct, and transparent performance evaluation is much needed.

Exit Interviews

Those who leave the company may have information which may help in fraud detection.

Segregated Allocation of Duties

Minimizing monopoly in any area is a must.

Access and Authority

Same as above.

Transaction Controls

Any suspicious activity must be reported.

Auditing

This helps a lot in terms of fraud prevention and detection, more so if you conduct both external and internal audits.

Proper Documentation

Ignoring how important documentation is in fraud prevention and detection, its use in instances where a case may be filed cannot be discounted. For organizations with crime or fidelity insurance, proper documentation is priceless!

Fraud investigation and prevention is one of the key parts of every company’s risk management plan and management process. For more information on designing an effective fraud prevention program, contact us and let the best private investigators in Toronto take care of that.

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