Best practice principles for the prevention of fraud

100 percent fraud prevention is simply not practicable. The degree of control required would render an organisation simply too inefficient to compete, and the associated costs would be too high, almost certainly more than the organisation would save on the potential losses attributable to fraud. 

That does not mean there is nothing you can do to lower your risk of corporate fraud. All too often the first a company knows of fraudulent practice within the organisation is the effect the fraud has on a business area. In many cases, business owners can use the services offered by free company checking software on sites like, which often include company credit and fraud checks. These services are used to verify that potential suppliers and clients have the financial wherewithal to pay for services rendered. However, these checks can also uncover information about their own business, such as insider activity which has detrimentally affected their credit profile. This is often the first inkling a business owner has that all is not as it should be.

Despite the infeasibility of fraud prevention, there are a number of methods organisations can use to reduce the underlying causes of fraud in the workplace.

Establishing an audit committee

Bureaucracy is often the adversary of efficient businesses; however, an audit committee set up to design and create fraud prevention measures, investigate reports of malpractice and act when fraudulent activity is uncovered is a must for growing organisations.

Developing secure computer systems

Problems often occur when a single individual or department is the sole gatekeeper of a specific piece of technology or data. Integrating databases between departments and cross referencing information, both internally and with outside organisations, is an effective method of identifying fraud.

Strong leadership

Messages about fraud should disseminate from the top of the organisation and be reinforced with positive actions. Any concerns of fraudulent activity should be dealt with strongly and as a priority, supporting the message that fraud will not be tolerated.

Clear lines of communication

Communication plays a key role in the employees’ understanding of what fraud is and the impact it has on their jobs. All employees should be made aware of the telltale signs of fraudulent activity and understand who they can turn to report any problems they may have.

Whistle blowing 

Whistle blowing has been a contentious issue in the past, with many employees being ostracised by organisations after simply acting for the greater good. Employees should be familiar with the appropriate reporting routes if they do have any issues or suspicions, and understand that their own investigations into fraudulent behaviour should not be attempted. They should be clear that any disclosures made in good faith will be welcomed and will not affect their position of employment.

The damage of fraudulent actions reaches further than a simple financial loss. By taking the time to implement a fraud prevention policy and communicate this clearly across the organisation, it is possible to deter, if not prevent the destructive damage which so often results from insider fraud.

What are your experiences or fraud prevention in the workplace? Do active deterrents like those described above actually work? We’d love to hear from you, so please your thoughts in the comments section below. 


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