An ounce of prevention could save your business: Harris
By AdvocateDaily.com Staff
It’s important for companies to assess their level of exposure to fraudulent activities that, left unchecked, could devastate your business, says forensic accountant and chartered business valuator Patricia Harris.
“Although many businesses believe they have adequate controls to minimize the risk of fraud, employee theft is still prevalent across all industries,” says Harris, a partner with Fuller Landau LLP.
She says a fraud risk assessment from a forensic accountant will identify potential fraud risks and schemes in such areas as cash, inventory, accounts receivable and payable, cost of goods sold, payroll, and revenue.
The assessment will also evaluate the likelihood of occurrence — low, medium, high, Harris tells AdvocateDaily.com.
It will identify the significance if fraud were to occur, the internal control weakness and ways to improve those controls. It will also highlight the personnel who have the opportunity to circumvent the controls, she says.
In addition, a fraud risk assessment will pinpoint the assets that may be moved or taken by an employee and lay out possible ways the actions could be concealed and converted, Harris says.
“A fraud risk assessment performed by a forensic accountant will identify vulnerabilities in your organization and point you in the right direction to improve controls in those specific weak areas,” she says.
“For example, installing proper surveillance cameras at loading docks or in areas where cash is handled, and more importantly, monitoring the activity and control, will minimize fraud risk,” Harris says.
With the assessment complete, a forensic accountant can also help a business formulate a fraud response plan, she says. And it can greatly expedite the response time if fraud is detected, and provide a road map for the steps to take when fraud is suspected.
“Whether you’re looking to protect your business from the dangers of potential fraudsters or formulating a fraud response plan for your corporation, the first step is to contact a forensic accountant for a consultation,” Harris says.
“They have the depth of knowledge and experience required to assist in keeping your business as safe as possible from fraud.”