Do you manage a small business or organization?
Are your internal controls effective?
Have you considered your business’s susceptibility to fraud?
Man Prevents Fraud
Non-accounting personnel can perform fraud by misappropriating non-cash assets or by using billing schemes.

BY MARCUS NARVAEZ — MANAGER

Small business fraud is prevalent and costly. Over 30% of fraud is occurring in businesses with less than 100 employees, and losses average $150,000 per case as identified by the Association of Certified Fraud Examiners (ACFE) 2016 Report to the Nations.

Fraud takes many forms and often times extends well beyond the accounting department or small business bookkeeper. The ACFE found that non-cash misappropriation of assets is present in 19% of small business fraud cases, and billing schemes are present in 27% of cases. Non-accounting personnel can perform both of these methods of fraud.

In ACFE’s study, a lack of internal controls accounted for over 29% of fraud cases, and an additional 20% of cases included an override of existing controls. Implementing strong internal controls like segregation of duties, monitoring of inventory and supplies, and approval processes over purchasing and expenses are vital.

Internal Control & Fraud Prevention Consulting Services

Strong internal controls are not only a tool to detect and prevent fraud or errors but are also a beneficial fraud deterrence tool. Locking a house will not prevent a determined thief, and internal controls do not guarantee that fraud will not occur, but similar to a lock on a door, the possibility of detection is a strong deterrence.

MBE CPAs, LLP offers consulting for small businesses and organizations to assist with identification of current risks in business processes, design and implementation of internal controls, and development of fraud prevention tools.