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10 Fraud Prevention Techniques You Can Use Today!

10 Fraud Detection Techniques You Can Use Today!

Fraud costs organizations more if it is ignored!

No organization wants to wake up to find itself the center of unexpected liability or unwelcome scrutiny. That vulnerability is more significant with the increase of occupational fraud stimulated by today's tough economy, and your resources are stretched thin. 

Fraud costs everyone more if it's ignored, and your organization is not immune from it, especially during COVID. The ACFE's Report to the Nations on Occupational Fraud and Abuse states that financial statement fraud is the most costly. For small businesses, any type of fraud can e disastrous.

Beyond the direct financial impact, organizations can face regulatory violations or non-compliance issues. Public organizations face penalties for failing to meet SEC obligations, and non-profit entities could face the loss of government funding. This is especially detrimental during a crisis like we are seeing now when non-profits rely on outside help to support communities.

The following is a list of fraud prevention techniques companies can implement immediately.

Use a Hotline:

By far, tips are consistently the most common fraud detection technique. In fact, employee tips are the most common method to detect any unethical behaviour in the workplace. In the Report, over 40% of all cases were detected by a whistleblower tip. This is more than twice the rate of any other detection method. And employees accounted for nearly half of all tips that led to the discovery of fraud.

Multiple Reporting Mechanisms:

Offer multiple reporting mechanisms. Your employees aren't the only people with eyes and ears on your organization. Fraud can be observed by contractors, vendors, customers, and members of the public. If your fraud tipsters can access your tip line via phone, email, mail, fax, and web, all parties have different options open to them and they'll be more inclined to choose their method and make their report.

Outsource "Third-Party" Hotline:

Internal systems often sit behind firewalls. If you have an internally run system, there's a good chance your employees, who would prefer to use your system from home, can't because they can't access it. An external third-party whistleblower hotline increases accessibility to anyone who needs to use it.

Training Your Employees:

Train all your employees on what fraud is, what to look out for, and how to report it. Frauds will differ from industry to industry. If you're in the healthcare industry, then you need to look out for false billing of services, or incorrect diagnosis reporting. If you're in the financial industry, you'll need to look out for mortgage or securities frauds. If you have a tip hotline, your employees need to know about it and how to use it.

Train Again:

Train your employees every year or twice a year, on how and where they can report on any behaviours they think are questionable, and may go against your corporate ethics and culture. – you can never train enough – every opportunity to educate staff on fraud and unethical behaviour is helpful.

Protect Assets:

Smaller businesses probably have petty cash funds and other cash assets within the office. Put processes in place for handling these – require receipts for everything. Reconcile your petty cash fund before replenishing it. As well, most organizations require employees to have use of company credit cards. It can be very tempting to misuse these. For example, if you are a manufacturer of a food product, you probably have delivery drivers eating up miles on the road to make their deliveries. The organization will issue credit cards - for use on truck gas, lodging, food, when on the road - that could easily be used for personal vehicle gas-ups, etc. Get receipts for every transaction and compare them with on-road schedules.

Fraud Triangle:

Most occupational fraudsters exhibit certain behavioural traits that can be warning signs of their crimes. They may be living beyond their means, suddenly owning new houses or cars. Also, they may have more than unusual close associations with vendors or customers. According to the ACFE's Report, in 92% of the cases, at least one common behavioural red flag was detected.

Reduce Opportunity:

Internally in your organization, you can help reduce the opportunity for occupational fraud. Sure it's hard today, with a seemingly shrinking workforce, and more work to be done. But if possible with sensitive duties or tasks, try to segregate these between more than one employee. Put internal controls in place to regularly track or audit these sensitive duties. But most important, develop a culture and environment of integrity. An employee is less likely to commit fraud if they feel like they are a contributing member of the organization, and if management also exhibits actions of integrity and trust.

Spot Audits:

By implementing a spot audit program and conducting random audits on particular areas where fraud could occur, you can keep ahead of any possible threat, and if you do find any concerns, you can immediately conduct whatever investigation you need to rectify any issues.


Having a policy, then filing it away, isn't enough. Your policies need to be kept fresh, updated on occasion, and available organization-wide. These policies will instruct how to manage conduct, ethics and expected behaviour. Important - it has to be actioned from the top down! As well, your policy should cover where and how your employees can report on any concerns they have, and what they can expect as follow-up action when and if they do so.

Fraud can be preventable. You just need to do something about it. Incorporate a strong compliance program that includes an ethics reporting system. And empower your employees to speak up when they see wrongdoing. Learn more about how you can prevent fraud in your organization - get your complimentary eBook: 7 Reasons to Implement a Whistleblower Hotline.

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photo Amanda Nieweler
About the Author
Amanda writes for WhistleBlower Security about ethics, compliance, workplace culture, and whistleblower hotlines. Amanda brings her nearly two decades of risk and compliance experience to the WBS blog where she is dedicated to helping people and companies promote speak-up cultures.