by Vims

Created on: May 20, 2008   Last Updated: June 22, 2009

Fraud is a deliberate misrepresentation which causes another person to suffer damages, usually monetary losses. Many fraud cases involve complicated financial transactions conducted by 'white collar criminals', business professionals with specialized knowledge and criminal intent. An unscrupulous investment broker may present clients with an opportunity to purchase shares in precious metal repositories, for example.

Combating fraud has never been an easy task for businesses, states, governments or even the regulatory bodies. However, for small businesses, fraud is more easily detectable since there is not much activity in the business. An example of fraud in small business might be inventory disappearing or even stationary going missing.

Some simple guidelines have been established; firstly never extend credit to individuals or companies which the business does not have any knowledge as the business need to know if the other company is able to pay its debts. In some cases fictitious companies take advantage and buy large amounts of goods or services on credit and never paying.

Also the privacy policy of the firm should ensure that there is no trading of insider information which could lead to unsolicited people having access to confidential or important documents. Adherence to this policy will surely change the behavior of certain fraudulent staff members. The management needs to ensure a zero-tolerance approach to set the right example.

Checks should be carried out very frequently in order to know how resources inside the business are being utilized. Money should be carefully scrutinized to find any discrepancies. This act will surely discourage further fraud by staff members.
Regarding confidential matters or material, only the appropriate staff should be given access to it. This practice would ensure that no confidential information is being leaked which could have led to fraud.

Another consideration to combat fraud is that there must be thorough check of employees or any potential employees. Management should be very careful in their selection process and try to gain as much as possible information about the employees, their backgrounds, how they fared in their last job, any possible judicial cases.

Following the above mentioned steps can help ease out fraud in a business since high levels of fraud can even lead to corporate failure and businesses need to be careful not to find themselves in deep trouble.

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