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The Right Strategy to Avoid Financial Fraud (Fraud) in Business


In carrying out accounting activities, it is normal to make mistakes. However, please note that not all of these errors can be tolerated. The reason is, there are two types of errors in accounting, namely errors ( errors ) and accounting or financial fraud ( fraud ). It is this fraud that needs to be watched more deeply because the perpetrator is most likely to have done it on purpose, which is different from the error that ideally is not done intentionally.

Fraud can be said to be a fraudulent act committed in various ways, with the aim of classifying oneself / group or harming other parties. Because fraud tends to be done on purpose, usually employees or parties who do it will try to hide the accounting fraud. That's why fraud is usually more difficult to detect than errors.

The good news is that fraud in business can still be prevented. You can see some of the methods below.

Types of fraud in business

Fraud in business has many different types. These types are divided based on two things, namely actors and actions. The following is a more complete explanation.

Types of fraud based on the perpetrator:

Employee fraud - accounting fraud committed by employees in a company or work organization.

Management fraud - accounting fraud committed by management by using financial reports as a tool. Usually they aim to deceive thecompany's stakeholders .

Types of fraud based on actions:

Misappropriation of assets - deliberate misappropriation of company assets for personal gain , usually by employees, such as embezzlement of company cash funds.

Fraudulent financial reporting - deliberately ignoring the amount and recording of financial statements to deceive report users, usually more often done by management, for example, such as overstating assets.

Business fraud factors

Whether committed by employees or management, fraud in business is generally influenced by several factors. In this case, the driving factors for fraud can be grouped into two types, namely:

Individual factors

Need - this is related tothe employee's or management's mindset and view of the assets owned by the company, usually the perpetrator has an urgent need that “forces” him to commit fraudulent acts.

Pressure - the pressure or pressure from the surrounding environment can make honest people have a motive for committing accounting fraud, for example due to peer pressure from work colleagues or pressured needs.

Greed - this is still related to a person's morale, which is influenced by his environment and outlook on life.

General factors

Opportunities for cheating are always there at every employee level, but usually company management has a greater potential to do so because of more access.

Exposure - the existence of fraud in the company could “inspire” other employees to do the same, therefore every perpetrator should be subject to serious sanctions.

How to prevent fraud in business

The occurrence of fraud in business can certainly bring its own disadvantages. Not only from a financial perspective, but also time and energy to complete it. Therefore, you should take fraud prevention steps from the start.

Background check of all employees

You can actually prevent fraud in business since the process of recruiting employees. Before calling a candidate for a job interview , it's a good idea to do a background check on the prospective employee, especially if he or she will be working in accounting. Find out if the person has been involved in criminal activity, violated previous workplace rules. Then, also make sure all the information on the CV is indeed proven.

Internal company controls

Internal controls are plans or programs that are implemented to safeguard company assets, ensure the integrity of transactions and financial reports, and prevent fraud. The best way to do this is by dividing the duties and responsibilities among different employees. For example, you could assign one employee to handle the cashier, one employee to record financial reports, and one employee to serve as a supervisor.

In addition, do internal control through documentation. The goal is to help you minimize the risk of fraud. For example, if sales proof is recorded in a document, in this case a financial report, then the business owner can regularly monitor the report to ensure that nothing is missed. To make the process easy, you can use cloud -based Sleekr Accounting accounting software . That way, you can monitor financial reports from anywhere and anytime even if you are not in the office even once.

Implement an anonymous fraud reporting system

You certainly can't keep on keeping your eyes on the monitor for fraud. Therefore, just implement a system where employees can report fraud anonymously if they find out.
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