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According to the Association of Certified Fraud Examiners’ 2020 Report to the Nations, businesses with less than 1,000 employees account for almost half the incidents of fraud and have greater dollar loss compared to medium and large companies.

In their study of 2,504 cases across the world, small businesses with less than 100 employees were found to be two times more likely to encounter billing and payroll fraud and four times more likely to have check and payment tampering as compared to larger organizations. Billing fraud was found in 20% of the cases, check/payment tampering in 10%, and payroll fraud in 9%, totaling $272k in median losses.  

Tips account for 43% of detected frauds, with employees reporting half of those tips. Frauds detected by tip took 14 months to discover, while those from document examination took 18 months, internal audit detected fraud within 12 months, and account reconciliation showed fraud by 7 months. 

Small businesses are most likely to detect fraud by tip. The most common forms of obtaining tips are email or some other type of electronic communication and telephone hotlines.

What can you, as a small business owner, do to detect and prevent fraud in your organization? Implement one or more reporting channels for employees to submit tips as noted above, educate employees about fraud, ensure there is proper oversight of your business processes, and…

…call Dragon Investigation Group. We help small businesses protect their hard-earned assets by performing risk assessments, financial and compliance audits, investigating tips and potential fraud, and establishing controls to help prevent financial loss. A fraud risk assessment could potentially reduce losses by 33% and a formal compliance and/or financial audit could reduce losses by 50%.

Call us today for a free consultation.

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