From embezzlement schemes to falsified financial statements and beyond, internal fraud can have consequences for organisations that extend far beyond immediate monetary losses. But while every organisation is vulnerable to some degree, there are significant fraud prevention measures businesses can take that help create a culture of integrity, strengthen internal controls, and mitigate the risks associated with occupational fraud.
First, the bad news
ACFE’s widely quoted statistic finds approximately 5% of all annual revenue is lost to fraud. Globally, that translates to a staggering US$4.7 trillion lost to fraud annually.
And the consequences of undetected fraud extend beyond simple misappropriated funds. Indirect expenses include harm to an organisation’s image and decreased business, as well as heightened attention from regulatory entities, resulting in greater expenses related to legal matters and compliance.
Additionally, the presence of fraud and unethical behaviour has a strong influence on employee morale and efficiency. When employees lose confidence in the ethical principles of their workplace and leadership, it can lead to heightened absenteeism, increased employee turnover, and decreased productivity. These repercussions can significantly affect overall performance, making it more challenging to reach fundamental business objectives and ultimately leading to a decline in revenue.
The ACFE report quoted above also finds that, typically, an instance of organisational fraud usually lasts approximately 12 months before it is discovered. This finding underscores the challenge organisations face in detecting fraudulent activities in a timely manner and speaks to the need for robust anti-fraud measures and detection mechanisms.
Indeed, ACFE’s research highlights the importance of proactive fraud prevention strategies and the value of timely identification of fraudulent behaviour to minimise financial losses and mitigate the overall impact on businesses.
Fraud prevention and detection
For organisations of any significant size, complete immunity from dishonest behaviour is an unrealistic goal.
But there are very real, very effective steps that organisations can – and must – take to combat fraud and minimise dishonesty (and other unethical behaviours) in the workplace.
Whistleblower technology company Report It Now® provides organisations with the tools to foster an open and honest work environment, including training and assessment, third-party exit interview services, and the EthicsPro® platform – a secure and confidential platform for staff to report unethical behaviour in the workplace.
Anonymity is a deal-breaker for individuals who want to report fraudulent activities without fear of retaliation.
EthicsPro® lets employees and other stakeholders submit reports anonymously – digitally or through a trained disclosure officer via the telephone hotline – so you can foster a safe environment for reporting potential fraud.
By offering convenient, secure reporting for employees, suspicions or instances of fraud are more likely to be reported promptly, enabling early intervention, minimising the impact of fraudulent activities and preventing further losses.
Centralised reporting and fraud prevention
A centralised system for receiving, managing, and tracking fraud reports provides a top-down organisational overview and helps you develop a comprehensive ethics and compliance strategy.
Additionally, EthicsPro’s trained, third-party disclosure officers ensure that all relevant information is captured accurately at the time of the report. With a structured process in place, essential details on hand, and next steps laid out, investigating and addressing reports effectively, fairly and promptly is easy.
Centralised and impartial, EthicsPro safeguards the identity of whistleblowers, and provides secure data encryption and permission-based access to reported information, ensuring disclosers that they can come forward with an expectation of organisational support, and without fear of exposure.
Report It Now supports your anti-fraud efforts, helping you create a culture of transparency, providing a safe reporting avenue when potential fraud is detected, and enabling timely response and fair resolution of reported incidents.
Click here to discuss your proactive approach to fraud prevention.