What Businesses Need to Know About Fraud
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Jen: This is the PKF Texas’ Entrepreneur’s Playbook. I’m Jen Lemanski, this week’s guest host, and I’m here today with Danielle Supkis Cheek, a director and one of our certified fraud examiners. Danielle, welcome to the Playbook.
Danielle: Thanks, Jen.
Jen: I know the Association of Certified Fraud Examiners just recently released their 2018 report to the nation discussing fraud and various statistics. What do small businesses need to know to prevent fraud or at least reduce their risk of fraud?
Danielle: So there’s a lot of things small- and medium-sized businesses can do. Small businesses actually have a risk of twice the median loss as a larger business usually due to the limitations and controls that they have due to their limitations and resources. So one of the most effective methodologies, especially according to the ACFE, is having a proactive data monitoring process. That actually reduces your risk of median amount of loss as well as the duration of the loss by over 50%, so something like a data monitoring process. There’s other things that we can do, too, particularly around the cash management function, even with limited resources and limited staff.
Jen: So is that something that we would go in and make recommendations or would they contract out a company for the data loss prevention? How would that work?
Danielle: There’s a lot of different ways to structure it. A lot of companies that are larger have the resources to do that in-house. The companies that aren’t larger, that don’t have those resources, we can help them with that. As well as there are other services such as, like, a whistle-blower’s hotline that is just a third-party contracted service. The hotline is the number one way for tips to be reported, and that is the number one method of detecting fraud.
Jen: So how often do these small businesses find fraud? Is that in that report as well?
Danielle: There is a report that has actually 84% of U.S. companies reported fraud last year.
Jen: Oh my gosh. Well perfect, we need to get you back and talk a little bit more about fraud and what companies can do to prevent it.
Danielle: Would love to.
Jen: Perfect, thanks. For more about this topic visit PKFTexas.com. This has been another Thought Leader production brought to you by PKF Texas the Entrepreneur’s Playbook. Tune in next week for another chapter.