Stop White-Collar Crime: Prevent Fraud in Your Business

Chances are white-collar crime is occurring in your business as you read this–or at least within the last thirty days. Those you trust may be taking you for a ride. Therefore, you need to know how to prevent white-collar crime.

Below I provide you with plenty of free understandable resources to help you stop fraud. Take a look.

White Collar Crime Happens!

For most organizations, it’s not a matter of if fraud will occur, it’s a question of how much will be taken. The Association of Certified Fraud Examiners’ biennial survey shows that the average business loses 5% of its revenues to fraud. Imagine adding that amount to your bottom line, because when theft occurs, your net income is reduced by the amount stolen.

No One Steals from My Business

Most business owners, board members, governments, and nonprofits think “fraud may happen in other organizations, but not in our place. Our people are honest.” Well, let me say I’ve seen plenty of “honest” people steal.

In almost every fraud I’ve seen, the business owners and fellow employees are greatly surprised by the theft, usually by a trusted employee.

And these trusted people steal because they can. You may be thinking, “What?” Let me repeat, the reason people steal is because they can. In fraud prevention parlance, we call it “opportunity.”

Fraud Cycle

And, how do trusted employees steal? Here’s the typical cycle:

We hire a likable, trustworthy person
The employee serves the organization well
He moves to higher positions (where he has greater opportunity to steal)
No one monitors the employee because he is honest–or at least, he appears that way
The employee believes he can steal without detection
Small amounts of money are taken to test the water
Larger amounts are taken when he is sure no one is watching

So, the employee goes from trusted employee to fraudster. The transformation occurs gradually. Then when the discovery of fraud occurs, everyone is shocked.

Examples of People Who Steal

And what kinds of persons commit white-collar crime?

I have seen the following individuals take money:

Chief executive officer
Board member
Pastor
Church secretary
Healthcare executive
A lady who was dying
Doctor
College president
Swim club volunteer
Seminary Foundation employee
School principal

I could go on, but you get my point. People who we think would never steal, do.

So, how can we prevent–or at least lessen–the threat of fraud? Transparency is a key.

Transparency Lessens Fraud

If transparency is important, why don’t businesses create it?

Small businesses often lack the ability to segregate accounting duties, and this lack of segregation creates opportunities for theft. Why? One employee controls several critical accounting processes, resulting in the ability to steal without detection.

To lessen the possibility of fraud, we must create transparency in accounting processes. Employees are less likely to steal when their actions are visible to others. That’s why segregation of duties is necessary: more eyes see the accounting activity, making theft more difficult to occur without detection. But even if an organization has few employees, it’s possible to create transparency and lessen the threat of theft.