When it comes to protecting your business from the myriad of frauds that occur in U.S. workplaces every single day, being informed is the first step. Our private investigators are here to help you recognize these top five types of fraud in business so they can be stopped as soon as possible.
Payroll fraud is one of the top five types of fraud that are seen the most often in businesses of all sizes but particularly small businesses. It also takes many different forms, such as employees lying about productivity, payment advances, or manipulation of timeclock records. As such, those records should be carefully monitored and all potential employees should be thoroughly screened before onboarding.
Luckily, asset misappropriation is one of the top five types of fraud that is the easiest to spot. Missing assets are going to be noticed. Most managers and supervisors keep tabs on asset misappropriation by rotating out staff who are in charge of supervising inventory or cash kept on hand. It’s also crucial that any accounting positions are not singular, and finances are managed by more than one person.
Invoice Fraud Schemes
This type of fraud is a bit more complicated, and usually involves an employee who works in accounting. It’s achieved by generating fake or inflated invoices for purposes of stealing money from the company. These invoices may detail products that were never sold, vendors who do not exist, or B2B transactions that never took place. To avoid this, all invoices must be cross-referenced with inventory or performed work that is documented.
Financial Statement Fraud
This type of fraud is sometimes called “cooking the books,” in which financial records are altered or destroyed for financial gain or to fool investors into pouring more money into the company or to boost stock bonuses. Regardless of the aim, this kind of fraud can be devastating for a company, which is another reason accounting responsibilities must be delegated to numeral members of staff in order to prevent the funneling structure that allows this fraud to happen.
This is the type of fraud most known to the general public. Anyone can commit tax fraud by failing to pay their taxes, but it can also happen when companies misrepresent their earnings to the IRS in order to fall into a smaller tax bracket, or take advantage of exemptions. In order to avoid this, it’s imperative that all earnings must be reported on time.