How to Detect Fraud

March 8, 2012 — 854 views  

Implementing strategic practices to increase the likelihood of fraud detection can benefit a business. Proactive practices such as training, known accountability, secure networks, an accessible whistle blower program, knowledge of accounts, frequent balance inquiries and inventory checks can increase a business' chance of detecting fraud.

Train employees involved in the accounts payable or purchasing department or any employee who submits an expense report about the code of conduct and the procedure the company goes through to limit fraud. Mitigating fraud with education is a cost-effective technique many companies can easily implement.

In addition, maintain accurate and up-to-date ledgers of materials, accounts, documents and various other fiscal matters. Watch for excessive voided sale slips. This could mean that a purchase was charged, the payment diverted and the sales slip voided to cover fraud. Every account with money flowing in or out should be carefully monitored for any expense that seems out of the ordinary.

Common indicators of fraud include a vendor address that is the same as an employee address, duplicate invoice numbers and multiple changes in the vendor identity field and asset assessments from unauthorized sources. According to CSO Online, software is available to businesses that measure and examine every transaction, both financial and administrative, against a series of tests and norms. Proactive measures are the key to fraud detection.