Internal fraud is a growing problem for companies. It can take many forms, from theft of equipment to falsification of accounts, and can cause considerable losses to a company. So how do you prevent internal fraud?
With the types of fraud that could be perpetrated within your company in mind, it’s important to manage the risks of asset, liquidity or reputational loss. Various solutions are proving effective. Discover our tips for implementing effective preventive measures.

How to combat internal fraud

1. Check your staff’s background

Criminal and civil background checks are now an accepted hiring practice. Anyone intending to commit fraud will go to great lengths to appear honest and trustworthy, and will often provide glowing references and an impeccable résumé. Depending on the hierarchical level, a periodic audit may be a desirable mitigation measure.

For a reasonable fee, many companies or employment agencies will check not only the candidate’s background, but also the references provided and declared experience.

2. Draw up and distribute a code of ethics and professional conduct

The Code of Ethics and Professional Conduct is a management guide whose main objective is to dictate the rules of conduct in terms of integrity, impartiality, loyalty, competence and respect.

A code of ethics must contain at least the following standards:

• comply with all applicable laws, regulations and policies;
• protect the confidentiality of information; and
• avoid any incompatible business activities and exercise restraint in outside activities.

Every year, employees at all hierarchical levels and directors must read the corporate code and attest to their compliance with the standards of conduct set out in the code.

3. Rely on adequate internal controls

Effective internal controls and segregation of duties contribute to sound corporate governance.

Fighting internal fraud: consulting services from Demers Beaulne

The reputational and financial impact of fraud can be significant, and often results in the loss of talent for the company.

Demers Beaulne’s Consulting Services team has solid expertise and can help you on a number of levels:

• an analysis of your fraud risks, which may vary depending on your organization’s activities (location, cash handling, high staff turnover, IT environment, etc.);
• assessment of your internal controls, including ways of improving existing controls;
• drafting and implementing a fraud prevention and detection program tailored to your level of risk tolerance;
• several policies and procedures can be drawn up to suit your needs.

Training can also be offered to employees, managers and executives on your organization’s specific fraud risks, to develop prevention and detection reflexes.

Don’t hesitate to contact us in case of internal fraud or to be proactive about it!