According to the Association of Certified Fraud Examiners report 28% of businesses under $100 million in revenue, reported accounting fraud or theft in their business.
“Reported” means that these businesses tried to get someone arrested. On the flip side, you have to think about the businesses that experienced fraud, but didn’t report it or try to get someone arrested. This means that the numbers are much higher than 28%. To make matters worse, according to that same report, the average size of the fraud was $200,000 per occurrence for businesses with fewer than 100 employees.
A per occurrence amount of $200,000 is a massive amount of fraud and businesses must make extra sales just to make up for what was stolen.
What can you do?
- You must have more than one person or multiple people doing your accounting so you have proper checks and balances in place.
- Make sure that the people handling your accounting all have separate jobs.
- Develop ‘cookbook’ style process documents. These documents will have step-by-step instructions for each accounting process and procedure within the department.
- Make sure that you have job descriptions by outcome so you can hold people accountable to the outcomes that have been set for them.
- Choose the right people and keep an eye on their work. It’s critical to have oversight so you can be confident that fraud isn’t happening in your business.
By following these steps, you’re going to have the best chance at avoiding fraud. If you suspect fraud in your business or if you’re interested in learning more about our TGG team of four structure, contact us today!
This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.
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Janine Smith is a Consulting CFO with TGG. She has a wealth of experience in accounting process development and management, supervising both TGG staff and client’s internal staff (banking, AR, AP, inventory management, payroll), and working with many different types of accounting software. She has worked with clients to develop KPIs that fit their current needs and coached them to support the goals of the business. One of her favorite tasks is budget development and using that as a tool to help organizations meet their goals.