As a small business owner, you understand the importance of protecting your company (and your clients) from fraud. However, in addition to taking steps to protect sensitive data, such as financial and personal records, you’ll also want to make sure you work to prevent occupational fraud. Below are just a few of the things you’ll want to keep in mind.
What is occupational fraud?
Whereas data breaches are often committed by outside hacking groups, occupational fraud is fraud that’s committed by an organization’s staff. This type of fraud falls into three categories, corruption, asset misappropriation (i.e., theft), and financial statement fraud.
- Asset misappropriation. Do your employees have expense accounts? Do you reimburse them for travel, meals, and other types of expenses? If so, you’ll want to make sure they’re not using their expense account to cover personal expenses. For example, if you allow your employees to expense up to $100 per day, for meals, while traveling, with the stipulation that alcoholic beverages cannot be included, you’ll want to make sure your staff submits itemized meal receipts. For more information about other types of asset misappropriation fraud, be sure to talk to your accountant.
- This type of occupational fraud is a bit more cut-and-dry. If your employees are accepting (or giving out) improper gratuities or bribes, or they’re accepting or giving out kickbacks, they’re engaging in occupational fraud.
- Financial statement fraud. This is the least common type of occupational fraud, but it’s something that business owners should be aware of. Financial statement fraud happens when one or more individuals, who are often senior-level managers, manipulate an organization’s financial statements to make the company appear as if it’s more profitable than it actually is.
How a CPA can help
When you work with a Certified Public Accountant, you’ll be working with a professional who can spot the various red flags that are associated with occupational fraud. This not only can help save your company money, in some instances, it can protect your company from costly litigation. Small businesses don’t often understand the types of protections they should have in place, which makes working with a CPA even more crucial.
For more information about the risks of occupational fraud, the types of occupational fraud that you should be most concerned about, or to learn more about how working with a CPA can help keep both you and your business protected, we can help. Call the office of Hughes, Snell and Co., PA today to schedule a time to speak with an expert.