So many frauds - such damaging impact!
In 2020, the Australian Competition and Consumer Commission (ACCC) reported that small businesses lost $1.16 billion due to scams, with an average loss of $9,500 per business.
In 2020, the Australian Securities and Investments Commission (ASIC) reported that the most common type of business fraud in Australia was investment scams, accounting for 46% of reported incidents.
The ACCC also reported that fake invoices and bills were the second most common type of scam targeting small businesses, accounting for 14% of reported incidents.
In 2020, the Australian Federal Police (AFP) reported that the total value of reported fraud cases in Australia was over $540 million, with a significant portion of this being attributed to business fraud.
A study by the University of Technology Sydney estimated that the cost of white-collar crime in Australia could be as high as $36 billion per year, with a significant portion being attributed to business fraud.
What steps should be taken to reduce the chance of a fraud?
Small businesses can take several steps to prevent fraud and protect their finances:
Implement internal controls: Establish internal controls such as segregation of duties, regular audits, and checks and balances to minimize the risk of fraud.
Use technology: Utilize technology to automate financial processes and detect unusual transactions that may indicate fraud.
Train employees: Regularly train employees on fraud recognition and prevention, and encourage them to report any suspected fraud.
Conduct background checks: Conduct background checks on new employees, especially those who will have access to financial information or have the ability to authorize transactions.
Establish a fraud response plan: Have a clear plan in place to respond to incidents of fraud, including who to contact and what steps to take.
Stay informed: Stay informed about the latest scams and frauds targeting small businesses, and educate yourself on how to recognize and prevent these threats.
Limit access to sensitive information: Limit access to sensitive financial information to only those who need it to perform their job duties.
Verify requests: Verify requests for sensitive information, especially when they come from unfamiliar sources.
Review financial statements: Regularly review financial statements and reports to detect any unusual transactions or discrepancies.
By implementing these preventions, small businesses can reduce the risk of fraud and better protect their finances.
How we can assist with fraud detection.
By working with an independent party who can challenge your internal controls or assist in setting them up greatly increases your chances of minimising fraud.
Get in touch today to learn how we can be of maximum assistance.