How to Prevent White-Collar Crime

Chances are, theft 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. That’s usually how fraud occurs. 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 taken.

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 trusted people steal?

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.

[Tweet “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 it more difficult for theft to occur without detection. Even if an organization has few employees, it’s possible to create transparency and lessen the threat of theft. 

How CPA Hall Talk Helps

CPA Hall Talk is designed to provide you with fraud prevention information.

While I can’t visit everyone that needs fraud prevention assistance, I can provide (free) information about how theft occurs and how you can lessen the threat of fraud.

Here are some of my fraud prevention posts (each with a clickable link):

• 25 Ways Fraud Happens
• How a Tax Commissioner Walks Away with $800,000
• Nonprofit Embezzlers Sell Donated Goods for Millions
• Do (Some) Librarians Actually Steal?
• Nonprofit Fraud: Bid-Rigging, Kickbacks and Faulty Payments
• Nonprofit Embezzlers Sell Donated Goods for Millions
• How $16 Million was Stolen from a Bakery
• Is Your Cash Receipts Supervisor on the Take?
• College Aid Official Funnels $4.1 to Herself
• Would Andy Griffith Steal?
• Why Stealing Unaccrued Receivable Checks is Easy
• Circumventing Approval Requirements by Splitting Payments
• Why Some Ranches Have a Bad Smell: The Rita Crundwell Story
• How Employees Steal with Company Credit Cards
• I Get By with a Little Help from my Friends: Payroll Fraud
• How Honest People Steal
• Why a Kind Person Steals While Dying
• How Bribes Assault Your Earnings
• How Fraudsters Steal with Inflated Invoices
• How to Steal by Double Paying a Vendor
• How Accounting Tricks Guarantee Increased Earnings
• A Fraudster’s Refuge: The Appalachian Trail
• How Can a Fraudster Write Checks to Himself?
• Stealing and Converting Company Checks
• Trains, Planes, and Automobiles: The Theft of Capital Assets
• How Employees Steal Using a Check-for-Cash Scheme
• Are Ghosts Lurking in Your Payroll?
• How to Prevent Wire Fraud
• Skimming Cash Payments
• Fictitious Vendor Fraud
• Key Fraud Statistics from The Association of Certified Fraud Examiners
• How to Steal Money with Altered Check Payees
• How to Use the Camera Effect to Kill Fraud
• How to Educate Children in the Art of Theft
• How to Prevent the Theft of Fixed Assets
• Bribery – Can You Stop It?
• How to Prevent Payroll Fraud
• Red Flags of Governmental Fraud
• Little Old Librarians (Do Sometimes) Steal
• Three Tips for Fraud Prevention
• How to Lessen Segregation of Duties Problems in Two Easy Steps
• The New COSO Framework
• Five Disbursement Fraud Audit Tests
• Fraud Prevention for Small Governments
• Steal Like a Boss
• Corporate Account Takeover
• Fake Bank Confirmation Responses
• Local Government Internal Controls – A List
• In Case of Fraud, Pull Here
• Three Minutes to Better Client Interviews
• Three Receipt-Fraud Tests
• Fraud Stings Auditor
• Theft of Cash From Local Governments (Cities and Counties)
• Fraudulent Payments Without Being on the Signature Card
• 2018 ACFE Report to the Nations (Key Findings)

I hope you find these articles helpful in fighting fraud in your organization. 

Finally, I hope you’ll join us here at CPA Hall Talk for more information about fraud prevention, accounting, and auditing. See the subscription box below.