Fraud can be quantified in terms of absolute dollars, but fraud also has personal impact. While costing company owners real money, it can also damage the company’s reputation whether or not the fraud is disclosed privately, or worse, publicly to the company’s stakeholders, including shareholders, employees, customers, vendors and financial institutions. Dealing with the consequences of fraud also wastes management’s time and resources. The impact of fraud cannot be underestimated; therefore, the prevention of corporate fraud is critical and cannot be overstated.
There are a number of ways that owners and officers of companies can either deter fraud or identify it on a timely basis after the fact. They are simple and effective.
Fraud prevention begins with a “tone at the top” expressing the importance of ethical behavior and the serious intent of management to create a business environment with checks and balances. That said, vigilance must be consistent and surprise “spot checks” will ensure that accounting and financial procedures designed to deter fraud are working as intended. The total prevention of fraud cannot be guaranteed, but strong policies and consistent oversight can go a long way towards minimizing the possibility of fraud impacting an organization.
Andy Baker is a director at the Dallas office of Riveron Consulting where he and his colleagues specialize in serving middle-market private equity funds and companies growing through acquisitions. He has more than 11 years of consulting and public accounting experience. www.riveronconsulting.com
Jun 06, 2015 Comments Off on Super Managers & Super Salaries