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It can be challenging to avoid fraud altogether within a business. The higher-ups must keep in mind that fraud can occur relatively easily and have a plan to handle such a situation. Luckily, there are helpful methods they can use to keep fraud to a minimum. Let’s drive into some methods for identifying fraud.
Tip Lines
Tip lines or an anonymous website is a solid way to help you identify fraud within your business. Using a hotline will help make fraud much less of an issue. This is one of the most commonly used methods. It can also be independently investigated; therefore, it is great to go directly to the internal auditor or legal assistance. Tipline policies should go over what is accepted, rejecting those that violate fraud, ethics, or policy violations, and cover the rights of the accused. Make sure to include tip lines in employee training or provide ongoing information.
External Auditors
The goal for statement auditors is to make sure that financial statements are accurate. Therefore, they often come across fraud, especially with significant losses. They can assess the risks of misstatement within your business’s procedures and evaluate the likelihood of management override of controls. Auditors can help you understand why fraud exists and the factors that may have pushed the perpetrators: pressure, opportunity, and rationalization. They may have a severe need to come up with some quick money, performance pressure, or to cover something up. Regardless, external auditors can help you identify where it began.
Internal Auditors
Internal auditors deal with a broader range of fraud rather than what impacts the financial statements and can discover internal fraud. They use fraud indicator systems to find suspicious activities that can then be investigated. Internal auditors can also handle policies and procedures violations.
Dedicated Departments
Some businesses even devote departments to information security and fraud detection. With the internal security or loss management department devoted to specific fraud detection types, your business would be much more secure. These departments can be operated independently or managed by an internal auditor or information officer.
Miscellaneous Fraud Detection
It is not uncommon for another party to notify the fraudulent business or even discover fraud by confession or accident. Sometimes fraudsters fail to cover their tracks properly, and therefore it is wise to train employees to detect and report irregularities. It is in your best interest to secure E&O Insurance so that you are properly prepared to protect your business and have active detection methods in place to help identify fraud cases as early as possible.
About Transparity Insurance Services
Transparity Insurance Services was founded for the purpose of helping clients to ensure their property and assets with no hassle. We are committed to providing a simple, easy, efficient, and positive experience to all of our clients, and prioritize open and transparent communication with our clients. Through our excellent customer service and technology, we can help you to find the right insurance program at a competitive price. Contact us today at (855) 889-2037 to learn more about what we can do for you.