Many business owners in Ohio pride themselves on operating on the right side of the law. They prioritize best practices and ensure their taxes are filed correctly and on time. When it comes to business fraud, however, it is possible for an employer to be unaware that illegal activity is taking place. These mistakes can be costly and even ruin a business.
This year, the Association of Certified Fraud Examiners, Inc., released a report that examined business fraud across the world. One astounding finding was that a single instance of illegal activity could cost $150,000 – and that was the median amount. For larger companies, that may not seem like much. However, for smaller companies, that number could mean significant losses.
To avoid fraud, owners must be able to recognize it. Entrepreneur magazine points out that a number of illegal business practices can go unnoticed. This often occurs due to a corrupt employee. For example, an accountant who keeps the books for a business could commit fraud through writing a check to pay a bill and simultaneously write another check for him- or herself, coding them both the same in the system.
Payroll fraud is also common and occurs when an employee lies about his or her time working. Doing so even a little at a time can add up to a major expense. Companies that do not reconcile their payroll with time sheets could easily miss the wrongdoing.
Lastly, someone in charge of ordering supplies could take advantage of that position. Through ordering too much, returning it and using the return for individual purchases, the employee commits fraud.
To remedy and prevent these situations, businesses should never have just one person in charge of signing paychecks or balancing the books. Every year, an independent firm should be brought in to look over a company’s finances. Taking these small steps can prevent a big problem down the road.