Most people are pretty trusting.
We believe our coworkers are honest.
If we own a business, we trust that the people we hire will do the right thing.
We never want to believe anyone would harm us.
Unfortunately, sometimes that trust is broken.
The State of Fraud Inside Small Businesses
The Association of Certified Fraud Examiners releases a survey detailing global fraud each year. Here are some findings from the 2016 fraud report:
- The median loss in all fraud cases in their study was $150,000.
- That median loss was the same, no matter the size of the organization, meaning these losses placed a greater burden on small businesses.
- Small businesses were the least likely to have anti-fraud controls in place.
- Most of the fraud cases started in the accounting department (16.6%).
- Over 75% of all the frauds reported occurred in 7 departments, nearly all involved in managing money, contracts, or vendors: accounting, operations, sales, executive/upper management, customer service, purchasing, and finance.
Unfortunately, most businesses don’t think about fraud and embezzlement until after it happens to them. If you’re a CPA, accountant, or bookkeeper, what role can you play in preventing small business fraud and embezzlement?
Do You Teach Best Practices to Clients?
The small business owners you work with want more from you than form filling and tax filing. They look to you for advice and counsel.
More of your clients come from the Millennial and Gen Z generations. These youthful entrepreneurs know their business, but likely know less about best practices that will protect them and their assets. Truthfully, even experienced entrepreneurs sometimes fail to use anti-fraud controls.
It’s a smart move to inform clients how planned and spot audits, separation of duties, vendor reviews, and background checks can prevent the grief and financial loss that comes from fraud and theft.
How Can You Offer This As a Service?
Your clients may not know there are standard practices that reduce the chance of fraud and embezzlement. They may think their business is immune to such threats. It’s possible they don’t realize failure to put controls in place puts their business and its financial strength at risk.
There are several ways you can offer this type of education as a service.
- Include a best practices audit as an add-on to your standard services menu.
- For long-time clients, recommend a review of their anti-fraud controls, especially if it’s been a while since you’ve had this conversation.
- For new clients, ask if they are aware of anti-fraud best practices. If not, recommend that they schedule this review with you.
- For prospective clients, offer a free audit of their anti-fraud controls. This can be an opening to speak with them about your other services.
- On your website, offer a downloadable eBook that describes solid anti-fraud measures. If you collect email addresses in exchange for the download, you can build a prospecting list that helps grow your business.
Fraud and embezzlement crimes are expensive lessons for small businesses to learn. The future of accounting relies on adding value to the relationship between you and your clients. Education about this basic yet vital topic is one simple way for you to build that relationship.