FRAUD

Recent years have seen a growth in business fraud.

The ramifications of fraud can be more serious than incidents of theft and may prove sufficient to ruin a company.

The following are simple management safeguards:

> Review your management control systems for weaknesses. Consider taking advice from a specialist

> Check the bank and trade references of new suppliers and clients using bona fide trade protection associations or credit reference agencies

> Try to avoid dependence upon one or two major clients or suppliers

> When dealing with new or unreliable clients, try to protect your financial position by only making partial deliveries until part payment is received. Consider requesting personal guarantees or taking out credit insurance

> Carefully check applications and references of new employees, ensuring they are genuine. Several commercial services are now available to help in this regard

> Define job responsibilities to ensure that all staff understand their own responsibilities and know who to report to if problems arise

> Ensure there is adequate segregation of duties. Avoid having indispensable staff who alone know the workings of their part of the business.

And remember that the bigger and more sophisticated the fraud the more likely it is that senior staff are involved

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