Academic journal article Journal of Accountancy

Small Business Fraud

Academic journal article Journal of Accountancy

Small Business Fraud

Article excerpt

Fraud is a potential threat to every company, including small and midsize entities. The good news is that the risk of fraud can be managed. The following is a checklist of simple and affordable measures for small and midsize business owners and managers on managing the risk of employee fraud, including some technology-based measures that can be adopted when the threat of fraud is great.

Accept the idea that fraud is commonplace and can happen at any business.

* Set an appropriate ethical example for employees to follow, and treat them with respect and fairness, including fair pay.

* Ask your employees to identify ways in which someone could commit fraud at your company and the ways to avoid it.

* Develop a code of conduct that explicitly prohibits employees from committing fraud, conflict of interest and other illegal acts and ensure all employees, vendors and customers get copies of it. Consider having key employees provide annual confirmations of their compliance and have a clear company pohcy on time and expense reporting.

* Adopt a "trust, but verify" code. If you need only one bookkeeper, conduct a careful background check before hiring. …

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