Regular Audits Can Help To Prevent Fraud

As the amount lost by small businesses in various fraudulent scams, from online to employee theft, starts to soar, employers are beginning to realise that it is vital to conduct regular internal audits to combat this before the amounts lost get out of hand.

As the Internet has continued to expand as a retail channel, fraud has also expanded to exploit online businesses. Whether a business has an online department or is a completely e-commerce based operation, a regular audit of practices can protect a business from online fraud.

For example, without regularly checking the figures, many businesses with an online presence would not know if they are the victims of pay-per-click fraud, that could cost the firm a lot of money. Also, a bogus ad could redirect customers to the fraudsters’ website, thus depriving the original business of a potential sale.

In addition, it is not only in the B2C sector that businesses need to conduct regular audits. For example, B2B businesses can be caught out by invoice fraud and all owners should check out the identity and commercial solvency of the other organisation before entering into an agreement, particularly where invoices are sent by email.

Also audits can help to pinpoint employee fraud, which can take many forms, from payroll fraud, via complicated procurement scams to straightforward theft.

A thorough audit that looks at patterns and services as well as at the figures should alert the business owner that there is something wrong so that a more detailed investigation can take place.

While there may be an innocent explanation for these anomalies, it is better to check and find nothing wrong than to incur the losses further down the line and if employees are aware that nothing goes unscrutinised, they are less likely to try to defraud their employer.

London accountant, Paras Shah specialises in offering SMEs and owner-managed businesses audit advice, support and guidance.