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Fraud News
From: Newsletter of the Illinois Manufacturer's AssociationDate: February 22, 2000
Waging War Against Fraud
American businesses lose $400 billion annually to fraud. That's according to Marsha Bertrand, author of Scams and Swindles. Bertrand says experts say that small companies with fewer than 100 employees are 100 times more likely to experience fraud from within than large companies, because employers feel safe; they believe they "know" their employees. Police often are overwhelmed investigating violent crime, and consider business financial crimes a low priority, she said. She also noted that small companies usually aren't publicly held, so there are no outraged shareholders complaining to the SEC or the FBI to demand action. Bertrand says that 90% of the time employee fraud involves stealing money in some way, either directly or through schemes; the other 10% of the time inventory, supplies, equipment or information is stolen. The Association of Certified Fraud Examiners offers this checklist: • Have a written code of employee ethics.
• Screen job applicants by checking all references and doing background checks.
• Separate the jobs of keeping the books and writing the checks between two different people.
• Know your suppliers—ask for the explanations for any favoritism your purchasing people are showing.
• Have monthly bank statements delivered unopened to a high-level executive unconnected to bank reconciliation.
• Pay attention to customers who complain they have received bills for things they didn't buy or are being dunned for bills they already paid.
• Make sure only those who need access to various areas of your computer system have it.
• If a disgruntled employee leaves or is fired, change all computer passwords.
• Make sure your employees know to whom they can confidentially report suspicions or proof they have of fraud by other employees.
• Check addresses of vendors against addresses of employees.
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