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.
