Top Tips for Fraud Prevention Month

Organized crime is behind some of the biggest fraud schemes in Canada, but corporate fraud still eats into the profits of organizations worldwide.

Posted by Dawn Lomer in Article on March 7th, 2012
Fraud-related offences are now thought to be as profitable as drug-related offences, says the RCMP’s Commercial Crime Branch. In fact, in Canada it’s estimated at between $10 and $30 billion annually. The majority of the schemes are carried out by criminal organizations and methods they use become more and more sophisticated. But corporate fraud is still digging deeply into the profits of the average organization, with estimates of five percent of the average company’s revenue lost to workplace fraud.

“While the spotlight is on fraud during the month of March, it’s important to be vigilant about it all year long. Being cautious isn’t something to be ashamed of,” says RCMP Superintendent Steve Foster, Director of the RCMP Commercial Crime Branch.

The good news is that fraud can be prevented. Fraud Prevention Month is as good a time as any to review some of the top tips we’ve gathered from our expert sources for detecting and preventing corporate fraud.

Anonymous Reporting

Since more than 40 per cent of frauds are reported by tips or anonymous information, Stephen Pedneault, author of Anatomy of a Fraud Investigation, and founder of Forensic Accounting Services, LLC, stresses that every company should have education and anonymous reporting mechanisms in place.

[isight-ad]“Starting from the time of recruiting, through hiring and orientation as well as for existing employees, ensure everyone understands the means available to them to tell you anonymously if fraud is occurring,” he advises.

Culture of Integrity

Forensic accountant and fraud investigator Tracy Coenen stresses the importance of developing a culture of integrity in which employees know what’s acceptable and what isn’t, and ensuring that the actions of management reflect this culture. “…it’s not only leading by example but also having that very well designed line between what’s ok and not ok, that we never even want to get close to because we don’t want our employees substituting their judgment for ours,” she says.

Values Statement

An organization can accomplish this through the effective use of a values statement that’s brief, clear and ingrained, says Christopher Bauer, a psychologist, trainer, speaker, and consultant on ethics.

You’ll know you have a good values statement “if you notice that persistently decisions at all levels in all departments are measured to some degree by whether or not they are aligned with the values that you say you have,” says Dr. Bauer. The values statement must become part of the fabric of the organization.

When training employees, reference the values statement, advises Bauer. He also suggests making it a part of job interviews so that a new employee entering the organization has already been exposed to the company’s values and is thinking about them from the start.

Background Checks

Coenen also advocates keeping fraudsters out of your organization from the start, by conducting thorough background checks.

“The more sensitive the job or the higher the position, the more checking we want to do,” advises Coenen. “The most dangerous types of fraud for a company’s bottom line are those committed by upper management because they are typically of a size that can put a company into bankruptcy or could lead to the loss of a very large customer.” The degree of background investigation to be carried out on a potential employee, therefore, should reflect the level of position in the company and the potential for damage.


Dawn Lomer
Dawn Lomer

Managing Editor

Dawn Lomer is the managing editor at i-Sight Software and a Certified Fraud Examiner (CFE). She writes about topics related to workplace investigations, ethics and compliance, data security and e-discovery, and hosts i-Sight webinars.

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