Risk Management Blog - ClearRisk

3 Tips for Creating a Fraud-Resistant Environment

Posted by Cody Colbert on Thu, May 18, 2017 @ 14:05 PM

Next to controls, the single most effective way to prevent fraud is to create an environment that is fraud-resistant. It is possible to limit opportunities for fraud before they impact your organization by identifying unacceptable practices and advocating stringent consequences for offenders.

1. Define acceptable and unacceptable activities

The widespread nature of workplace crime highlights the need to clearly define acceptable versus unacceptable practices for your employees/volunteers. Is the use of the organization’s postage meter for personal mail acceptable? May an employee round up or estimate expenses incurred on an out-of-town trip, or are receipts required? High performing staff may know what is expected of them but since the "rules" differ widely from one agency to the next, defining what is acceptable is necessary before enforcement can begin.

2. Fully investigate suspected fraud

The second factor to consider when creating a fraud-resistant environment is the commitment to fully investigate all suspected fraud. Potential offenders must understand that their actions will be subject to intense scrutiny and that, when appropriate, evidence concerning the fraud will be turned over the appropriate authorities.

3. Treat offenders in a consistent manner

The final issue to consider when creating a fraud-resistant environment is the commitment to treat alleged and proven offenders in a consistent manner. Consistency is critical to the effectiveness of personnel policies. If an employee believes that theft of office materials will be overlooked because of his position in the agency, your environment will support and not deter fraud. Suspected theft should be subject to the agency’s investigatory procedures - regardless of the position or contributions of the individual involved. 

By adhering to these three essential measures, organizations will put themselves on the right track to becoming fraud-resistent and protect themselves from potential future lawsuits.

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Topics: fraud, fraud risk, fraud prevention