Considerations to Prevent Small Business Frauds

Fraud probably occurs in every organization, and you may not be able to totally eliminate it. However, you can do something to minimize the risk of fraud.

Information is sensitive and accounting information is even more. Handing over accounting information poses threat to business secrets. Many Small businesses think in this fashion. They are often afraid that if the information is disclosed to a third party be it an auditor or competitor, it can be misused. It is hard to change this attitude but there is something that small business owners can do to combat the frauds.

You can know about fraud screening via various online sources.

Small businesses have every reason to worry about fraud. But there is nothing to fear about this virus. This is the financial worm that has to be removed from the roots to combat the frauds. There are some useful tips to combat occupational fraud.

Oversight Process

The second important factor is a review of the accounting information. Just because the owners have the authority to sign does not mean that there are no frauds in the accounting databases.

Cash is not the only thing to be followed in any business, one more thing that plays a crucial role in the commission of frauds is books of accounts such as bills, purchase orders, and payment terms. Reasonable internal controls are critical in a small business. It is accepted that the small business owners have some more priority work but to review the accounts they need to spare time. 

Limited controls

Small businesses rarely have sufficient personnel to adopt adequate controls; "one-person accounting departments" are the rule, not the exception. Owners are unable to look into accounting matters. But the business owner should actively understand and verify the financial information reported to him or her.

The owner can engage external auditors to attest to the credibility of the financial information, even if the company doesn't have a regular audit. The controls in the organization need to be checked up regularly for deficiencies and loopholes, though not the only one, internal controls are a powerful deterrent to fraud.