1. Education . If employees are aware of fraud and how it happens, they will be your best on-the-job sleuths.
2. Surprise Audits . When employees are aware that there will be random checks of their areas, they are more likely to be honest. They also will not feel singled out when it is .their turn. for an audit.
3. Hotlines . A mechanism for anonymous reporting of fraud encourages employees to look out for the best interests of the company, without fear of reprisal.
4. Assessment of Internal Controls . Companies need to take an honest look at what fraud prevention controls they have in place. They also need to be honest about whether or not those procedures and policies are being followed and whether or not they really work.
5. Background Checks . Having the right employees is the first step toward fraud prevention. Avoid employees with criminal backgrounds or dishonest job applications.
6. Open Door Policy . Make employees feel that it is okay to discuss concerns with management. And then when they do discuss their concerns, act accordingly. Ask lots of questions, but be supportive.
7. Perception of Fairness . Pay your employees fairly and try not to show favoritism. When employees feel cheated or devalued, they are more likely to justify stealing in their minds.
8. Employee Empowerment . Give employees the authority and confidence to make decisions and take action. The more involved and empowered employees feel, the more likely they are to look out for the best interests of the business.
9. Continuous Improvement . Management should be constantly looking for ways to improve policies and procedures. Fraud prevention is an ongoing, dynamic process that requires continuous evaluation and improvement.
10. Employee Involvement . Your employees are the people who are most aware of areas vulnerable to fraud. Talk to them and ask for their help in securing the company.s assets. Fraud prevention applies to everyone, from the top down.
Missing one: nr 11. The tone at the top regarding integrity (management by example)
[…] healthy relationships with your staff. You can prevent or minimize internal theft and fraud by maintaining healthy relationships with your staff. Employees who are paid fairly, who can approach you with issues and concerns, and […]
Great article. It really covers everything from a work environment approach. I might add calling reference checks prior to hiring an employee to #6. It’s really amazing what information can be gleaned from a former employer or even a friend during a 10 minute phone conversation.
CCTV, Regular Patrolling, Rotation of security personnel, Proper deployment, proactive information and risk/threat analysis can prevent industrial thefts.