In these times of the so called economic meltdown, certain realities hit the businesses:
· Companies experience low/ reduced Sales
· Companies experience low/ reduced growth
· Companies experience deteriorating cash flows
With all the above hitting you, you don’t want an increase in Fraud added onto it. Hence like never before ensuring sound financial and business controls is key and fundamental.
Further, retrenchments have also become a buzzword in the work place. This too if not managed handled effectively an equitably, can also increase the risk of fraud. According to research, white collar crime is real and on the increase.
The National Bargaining Council (“NBC”) stated, in 2005, that chances of a company doing business in SA being defrauded, was 2 X that of their counterparts in the rest of the world and that approx 83% of companies reported white collar crime of some form or another.
According to the most recent official crime statistics (June 2008), the number of reported cases of commercial crimes rose by an alarming 21%. It’s not just the case of discovered fraud as a direct consequence of downturn. However with effected and looming retrenchments of spouses’ etc, employees are bound to be tempted to extend their fingers where they shouldn’t really be reaching.
The fault can’t be squarely placed on the employees; it’s an issue of controls within the company. Employees spot weaknesses in internal controls of the organisations where they work, over time and often get tempted to exploit them before reporting them to management. Sadly, it’s often the trusted employees who go ahead and commit fraud.
The onus is on management to prevent this from happening:
· Companies should think about more than just payroll and costs when embarking on retrenchments;
· It’s about safe keeping of assets and ensuring these are not abused. fraud does not just mean employees stealing money;
· Management always have to look at what structures have been put in place to prevent fraud.
For small companies that may not afford forensic audits:
1. Make sure there is sufficient segregation of duties;
2. Watch out for any signs of irregularities;
3. Keep your ear to the ground, often other employees know about the fraud scams.
IABC does offer affordable internal audits. – Mwendabai – 011 – 312 3149
More in this category: IABC Operating Timelines Amid Safety Concerns | IABC Group » Business Rescue – Changing the Landscape of Business Advising in South Africa » Salary payment still best option for business owners » Sars’ revenue collection increases by 6.3% y/y, but misses Treasury target – This Could Only Mean One Thing for Tax Payers » Impact of the Vat Change Effective 01 April 2018 on Transactions » Value Added Tax (VAT) from 14% to 15%, effective 01 April 2018 » Job disruption is coming to accounting too » » HIGH LEVEL SUMMARY OF PERSONAL TAX CHANGES ARISING FROM THE 2018/19 BUDGET SUBMISSION » IABC – NOW A GOLD LEVEL SAGE RE-SELLER FOR SAGE PRODUCTS » How Compliant is your VAT Administration? » 2012 Tax Season is Open » Softline Pastel Accounting & Payroll » Tax compliance, obstacles encountered by small and medium enterprises in South Africa » Audit vs. Independent Review for Companies » POTENTIAL RISKS WHEN BUYING A BUSINESS – BUSINESS DEVELOPMENT » Leasing vs. Buying – Corporate Finance » Security around VAT Registrations and administration – Taxation » ENTERPRISE RISK MANAGEMENT » 2011 Message from the MC » SEVERE NON-COMPLIANCE PENALTIES – (Taxation) » OUTSOURCING – Business Management »