“How to Detect Fraud in Your Business” E-Zone Forum
The E-Zone had its first Forum on “How to Detect Fraud in Your Business” this past Thursday and it was a huge success. The first speaker, William (Billy) Hickman, spoke to the attendees about several topics. He emphasized that most businesses will face some type of fraud over a period of time as opposed to through a single act. He gave a Johnny Cash example, referring to small frauds occurring little by little, which at one point turns out into a big one. He recommended for firms to have preventions, as most fraud claims come to him after the act was committed. Mr. Hickman went on to mention that companies lose around 5% of their revenues due to fraud, and last year around $3 trillion was lost worldwide. The problem is that small business are just not equipped or trained to fight fraud.
He mentioned the fraud triangle, which encompasses the idea that people only commit fraud when they find an incentive, an opportunity, and have the ability to rationalize the fraudulent behavior. He added another characteristic to the triangle though was the capability to commit the fraud, which has led to a new term, the “fraud diamond”. He gave some tips about how to catch fraud in the business as well. His advice was to pay attention to your employees and make note whether a person’s living coincides with his/her earnings. Also, changes in a person’s situation like divorce can be a factor, and people who leave the office late after business hours consistently are individuals which may be covering up an act of fraud. To prevent this, he recommended that entrepreneurs monitor their business to the best of their abilities. When hiring, always perform a criminal background check which only costs about $15 per search. As an employer, you could even go as far as checking a credit report or bankruptcy record, because if these individuals can’t manage their own finances you definitely do not want them handling yours.
The second speaker, Charles Williamson, added some other very valuable points. He 
states that small businesses rarely spend money or check worker’ references, which is a mistake since you should always pre-screen your employees and check all the references when possible. This can be performed at http://gov.georgia.gov/. Employers should also understand any breaks in the employees’ employment timeline as long breaks of unemployment are worth asking about. Furthermore, there should always be a separation of duties. For instance, employees that handle assets should not also document records, because it provides them too much control. He also recommended hiring a CPA to review and verify the companies’ account, which doesn’t require an audit. As an entrepreneur just be aware that of all frauds in small businesses, 90% involve cash.
After their presentations, there was a discussion/debate which gave all of the attendees an opportunity to answer any questions they had. Then there was coffee, desserts from Sugar Magnolia Bakery, and cake provided for everyone in the reception area by Chandler County Industrial Authority, which allowed for good networking opportunities.
This very first small business workshop provided the attendees with valuable information on running their businesses. I encourage you all to RSVP for the next one on November 3rd, 2011. The topic will be Selling Tips For Small Businesses with special guest speakers Bubba Hunt from Pawn City and Linda Mullen from Georgia Southern University!
Again we would like to thank the sponsors of the Forum: Dabbs, Hickman, Hill&Cannon, LLP; Sea Island Bank and Georgia Southern University.
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