Vince Iannello explains businesses can lose huge amounts of money through occupational fraud.
Vince Iannello notes that The Chartered Professional Accounts Canada (CPA) says occupational fraud is “misappropriation of assets, corruption, and financial statement fraud.” And examples of misappropriation of assets include using company machines or vehicles for personal purposes, cheque forgery, credit card abuse, cash or inventory theft, etc.
Falsifying invoices, false health insurance claims, kickbacks, bribery, etc., are examples of corruption in the workplace. Financial statement fraud involves changing cash flow statements, income statements, balance sheets, etc.
Tips on minimizing the risks
Employee fraud is a serious issue that can cause significant financial and reputational damage. Vince lannello explains that it’s essential to minimize the risks of fraud happening in the company. Here are some valuable things managers can do.
- Have an effective fraud prevention system, such as risk assessment, fraud logs, and disciplinary procedures.
- Train employees to be aware of potential fraud signs and report suspicious activities.
- Mitigate the effects of fraud by creating a culture where employees feel comfortable coming forward with information.
- Keep all financial records in a safe place at all times.
- Take time to review your financial statements and compare them with your policies and procedures.
- Check for any discrepancies between the records and policies, such as missing inventory or unauthorized purchases of equipment or supplies.
- Ensure that your employees are not making purchases on behalf of other employees or without management’s authorization.
- Review your payroll records to ensure that you pay the appropriate wages for each employee and promptly pay those salaries and any overtime hours worked if applicable.
- Review your expense reports to ensure that it is not being spent frivolously.
Final thoughts on How Businesses Can Protect Themselves
Workplace fraud is a widespread occurrence. It can be as simple as a cashier stealing from the register, or it can be more complicated, like an employee embezzling money from the company. Fraudulent behavior can take many forms and happen in many places, but it all boils down to dishonesty.
The best way to minimize internal fraud risks is to educate employees on what constitutes fraudulent behavior and how they can report it if they see or experience it. Iannello explains that businesses can reduce risks by implementing a process for checking and approving transactions and a system for monitoring accounts.
Vince Iannello, Chartered Professional Accountant, founded Vince Iannello Professional Corporation in 2016, offering accounting and tax services. Vince Iannello Professional Corporation also provides clients with financial and estate planning, as well as personal and corporate tax compliance and advisory. Iannello and his team can assist companies set up robust accounting systems to minimize occupational fraud.
Vince Iannello has over 15 years of experience servicing privately owned corporations, owner-managed businesses, and not-for-profits.
