Business Fraud Prevention Checklist

  • March 20, 2024
  • 5 min read
Business Fraud Prevention Checklist

For a company, organization, or even a government agency, cases of fraud that occur within the organizational level are indeed very detrimental. In order to prevent cases from further eroding the company’s stability, learning what causes fraud to occur can be very important in efforts to prevent it early.

Although various causes of fraud have been tried to minimize, the fraud act within the company may still occur. If this is the case, the company can only get losses and go bankrupt because the perpetrators haven’t been touched by the law or even noticed.

When the kind of fraud, like misappropriation of funds, is finally exposed, of course, the company must be prepared for the worst possibilities, especially in terms of financial condition and organizational stability.

There are many stories of companies being forced to go out of business because they could not survive the deteriorating financial conditions and having their structure crumbled to the ground. If this is the case, prevention is the best solution.

Before checking what kinds of things need to be checked to prevent fraud, here’s a little information about fraud and its types:

The Common Fraud Types

Fraud belongs to the criminal category, which is carried out by a person or group of people to obtain a personal advantage and harm another party or the company.

One of the institutions that deal with fraud is the Association of Certified Fraud Examinations (ACFE), based in the United States. There are three major groups of fraud according to ACFE, namely:

Financial Statement Fraud (Financial Statement Fraud)

Fraud can occur if there is the manipulation of financial statements that is carried out intentionally by management or the accountant who made it.

This fraud can cause losses to investors or creditors, and this manipulation can be in the form of data or financial, depending on the motivation of the perpetrators of the fraud.

Asset Misappropriation

This fraud can occur if there are company assets that are misused. There are various forms of abuse, including embezzlement of cash, use of company facilities for personal gain, or expenses without procedures and agreements from the company.

The greater the fraud committed, the greater the bad influence on the company’s cash flow.


This fraud takes the form of bribery, extortion, illegal giving, or conflicts of interest that can harm the company. This fraud can also be done individually or in groups.

And finally, here are some things that need to be checked to prevent business fraud:

Business Fraud Prevention Checklist

1. Socialization of Standard Operating Procedure (SOP)

Managers or business owners can prevent fraud by socializing the anti-corruption Standard Operating Procedure (SOP). Both old and new employees must be well acquainted with anti-corruption regulations, complete with the threat of punishment.

Preventing fraud can be done by socializing standard operating procedures or anti-corruption standards. Telling them about the laws is important since if every employee knows, understands, and works based on the standards set by the company, then they will get used to working with discipline.

These standardized rules can also be an effort and strategy to minimize and prevent fraud in the company and violations of company rules.

2. Create A Healthy Working Environment

A comfortable working atmosphere in the company will make all employees work comfortably, and their work productivity may also increase simultaneously.

At the same time, a sense of comfort can also build employee loyalty to the company so that they can work productively, disciplined, and effectively.

On the other hand, if the work atmosphere is not comfortable, the salary is inadequate, and there is no compensation or reward system for good work, it will certainly make employees think about committing fraud.

A safe working environment is also a must to keep financial data protected. And, if you’re working within a small workspace, you can easily secure your connection with a VPN.

You can always try to use Chrome VPN by PIA, which works wonderfully for the browser. Now you can access the browser more safely without worrying about getting cyber attacks from unknown parties.

3. Conduct Regular Audits and Evaluations

In every company, there is actually an internal audit. The task of this internal auditor team is to routinely audit the company’s financial statements, as well as to find out whether there are indications of fraud.

However, auditors from internal companies alone will not be enough to prevent fraud or fraud. You, as the owner of the company, must also regularly use the services of an external auditor team from outside the company so that a thorough and regular audit minimizes the occurrence of fraud, especially in the financial statements.

4. Improving Employee Ability in Financial Planning

The most common reasons why someone is desperate to commit various frauds are usually due to lack of money or being in debt. This could be because the person does not have the knowledge and ability to manage personal finances or make personal and family financial planning.

And for this reason, one of the efforts that the company can make so that employees have healthy finances is to hold FCPA training and training related to finance.

About Author

Andrew Lewis

Andrew Lewis is an expert web content writer and freelancer who is an expert in writing engaging articles in Business, General, Social Media, Tech, and Marketing and many more other categories. He has been serving our website for a few years. Andrew is a family man. When he isn’t writing, he loves to cook for his kids and spend time with them.

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