Corporate Fraud Detection: Best Practices for Fraud Prevention in Your Company

In our last post on corporate fraud prevention we discussed what to do when you discover an employee stealing or another form of fraud within your company.

In this post, we will discuss fraud prevention techniques.

1)   Best Practices for Internal Controls all Companies Should Follow for Fraud Management:

  •          Person who reconciles the cash accounts should not have access to bank statements
  •          Person who adds new employees to payroll system should have no payroll reconciliation/payment responsibility
  •          Person who pays vendors should not have access to the vendor master file

These are some simple common sense steps all companies should and can follow to create the foundation of a successful fraud prevention policy:

2)   Prosecute civilly and criminally.  Aggressive deterrence creates an environment hostile to fraud and a culture of honesty.

The most effective fraud deterrent is the BELIEF YOU WILL BE CAUGHT AND PUNISHED

3)   Management or the business owner needs to understand and review a monthly cash flow statement.  Following the cash is the key to preventing fraud.

If you follow these suggestions, the incidence of fraud in your company should be greatly reduced.  Remember, almost 50% of fraud losses are never recovered.

If you suspect fraud or have questions for a Certified Fraud Examiner, please contact Michael J. Stevenson, CPA, CFF, CFE, ABV at or 614-545-9100 x12.

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