Fraud Is Cheating! Prevent it with These 6 Methods!

Perhaps some of you are still unfamiliar with the concept of fraud. Yet, fraud is one of the most avoided things in the business world. In the economic context, fraud often occurs in the preparation of financial statements, which can cause losses to companies and errors in decision-making.

To understand it better, let's explore the discussion below!

What is Fraud?

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Fraud is the intentional act of presenting false financial statements by altering certain amounts, aiming to deceive the parties entitled to information in those financial statements.

Fraud is usually experienced by small companies, while large companies generally already have anti-fraud measures in place due to the availability of funds and employees who can perform supervisory functions optimally. However, it is not impossible for large companies to also experience fraud.

Companies must be mature and serious in preventing fraud to avoid large losses. There are many factors that trigger fraud in business, including incentives from perpetrators, opportunities for perpetrators to commit fraud, and the lack of supervision within the business itself that leads to fraud.

Types of Fraud

From all the cases that have occurred, fraud is often not committed individually, but by groups working together for their own interests. Fraud that may occur in a business takes various forms, including:

Financial Statement Fraud

Fraud can occur when there is intentional manipulation of financial statements by management or accountants. This fraud can cause losses to investors or creditors, and the manipulation can be in the form of data or financial manipulation depending on the motives of the fraudster.

Asset Misappropriation

This form of misuse varies, it can be embezzlement of cash, using company facilities for personal gain, or expenses without company procedures and agreements. The larger the fraud committed, the greater the negative impact on the company's cash flow.

Corruption

Fraud in this case can take the form of bribery, extortion, illegal gifts, or conflicts of interest that can harm the company.

Efforts to Prevent Fraud

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Various motives and methods that may be taken by perpetrators of fraud must be taken seriously by companies. To avoid potential losses due to fraud, prevention efforts are mandatory to avoid large losses in the future. Here are some ways to prevent fraud in your business:

Division of Responsibilities

Small and medium-sized companies usually burden financial tasks on one person. Their tasks vary, including paying bills, creating bank accounts, and so on. This situation creates a high potential for fraud. Therefore, additional human resources are needed to prevent fraud that may be committed by individuals with such broad access, especially in financial aspects. If funds are limited, you can choose the alternative of rotating employees periodically.

Be Careful in Recruiting Employees

You need to ensure that a prospective employee you choose has high credibility and can be trusted. There are several things you can do to check, such as auditing social media accounts and investigating the backgrounds of prospective employees. This is important because these prospective employees will directly involve themselves in your business.

Build a Positive Work Environment

Fair treatment combined with a conducive work environment can encourage fraud prevention efforts. Also, ensure that employees are aware of the consequences when they are proven to commit fraud. Anonymous reports can be chosen as a way to know the performance of employees from each other's perspectives, as different employees may have different characters in front of business owners and others.

Regular Surprise Audits

You can also prevent fraud in the workplace by conducting regular surprise audits. This way, fraudsters will be afraid that their cheating actions will be caught. At the same time, this action also makes other employees aware that the company is closely monitoring them. As mentioned earlier, the lack of supervision can trigger fraud in business.

Fraud Is Not Just About Money

You need to understand that fraud is not just about money. It is not impossible that there are also other fraudulent actions such as stealing important company data. Therefore, you need to establish strict procedures for access to sensitive data. Misuse of important company data, if it occurs, will cause significant losses to the company.

Use Integrated ERP Systems

We know that preventing fraud is not easy. Specialized software can be chosen to improve work efficiency and also work supervision efficiency. The use of software can realize interactions between internal companies to speed up data transfer and data supervision. This is necessary to find out or track if there are employees who intend to manipulate or commit fraud. Also, make sure that the software you choose guarantees confidentiality. Fraud often occurs due to password leaks, so the security system of the software must be reliable and designed in line with the company's interests.

In the culinary business, it is important to choose the right and trustworthy software provider. ESB CORE can be one of the supporting software to prevent fraud in your business. Especially if your business is in the culinary field, the data of each transaction needs to be recorded and organized properly.

ESB CORE provides convenience not only in monitoring transaction recording but also in ensuring the security of your cashiers and business transaction activities. One of the features of ESB CORE is the management role related to access to the purchasing process. For example, the cashier's job desk can only input transaction/purchase requests, but the management above must decide whether the request will be executed or not. Also, the purchasing department cannot change the price of goods (mark-up), as all access, checking, and decision-making are on the manager's job desk. He/she can cancel the transaction if there are differences in the system.

In addition to ESB CORE, there are other software that you can use in the culinary business. Such as OLIN, the first AI technology for the culinary business in the world which can increase the profit of your business with one of its benefits being to detect the probability of fraud occurrence and inform culinary entrepreneurs to conduct further investigation.

Certainly, there are many other advantages of ESB CORE and OLIN that you can use as a solution to prevent fraud in your business. For more information, you can see the ESB page.