Nevada Small Business logo
Search
  • Start

    Random

    • b

      Online Business Courses That Will Make You a Better Business Owner

    Recent

    • s

      SBA Resources for Your Small Business

    • b

      Online Business Courses That Will Make You a Better Business Owner

    • Money coin stack growing graph with tree top

      Three Ways Your Money Can Work for You

    • Legal
    • Manage
    • Money
    • People
    • Promote
    • Technology
  • Grow

    Random

    • Executive female giving a hand greeting

      Seven Ways to Save Money at Your Bank

    Recent

    • b

      Six Tips for Creating a Long-Term Strategic Plan

    • Does Your Business Have a Rainy Day Fund

      Does Your Business Have a Rainy Day Fund?

    • i

      Why Your Business Should Consider an Image Lockbox

    • Legal
    • Manage
    • Money
    • People
    • Promote
    • Technology
  • Manage

    Random

    • Smiling African American female nurse shopping online.

      Consortium Commercial Cards: Get Paid for Making Payments

    Recent

    • How to Handle Tough Customers

      How to Handle Tough Customers

    • s

      Six Business Trends Post-Covid

    • t

      Six Tips for Keeping Your Team Focused

    • Legal
    • Manage
    • Money
    • People
    • Promote
    • Technology
  • Economic Briefing

    Recent

    • February 2021 Economic Briefing

      Economic Briefing - February 2021

    • January 2021 Economic Briefing

      Economic Briefing - January 2021

    • Elko Economic Briefing

      Elko Economic Briefing - 4th Quarter 2020

    • Economic Briefing - December 2020

      Economic Briefing - December 2020

    • Economic Briefing - November 2020

      Economic Briefing - November 2020

    • Economic Briefing - Oct 2020

      Economic Briefing - October 2020

    • Elko Economic Briefing

      Elko Economic Briefing - 3rd Quarter 2020

    • Economic Briefing - Sept 2020

      Economic Briefing - September 2020

    • e

      Economic Briefing - August 2020

    • Economic Briefing

      Economic Briefing - July 2020

    • Economic Briefing - June 2020

      Economic Briefing - June 2020

    • Elko Briefing - Q2 2020

      Elko Economic Briefing - 2nd Quarter 2020

  • 2021 Small Business Survey
  • Newsletter Signup
  • Resources
  • About
  • Visit NSBank.com
  • Start
    • Legal
    • Manage
    • Money
    • People
    • Promote
    • Technology
  • Grow
    • Legal
    • Manage
    • Money
    • People
    • Promote
    • Technology
  • Manage
    • Legal
    • Manage
    • Money
    • People
    • Promote
    • Technology
  • Economic Briefing
HomeManageManage

Training Employees to Help Prevent Fraud

Fraudulent activity can often be caught by putting effective internal processes and procedures in place to minimize the chances for illegal behavior. But don't forget one of the best sources to assist with fraud prevention: your employees. In order to help detect and prevent fraud, employees must first know what to look for, and then what to do about it.  

Employee fraud can take place in many ways, but by far the most common involves accounting, accounts payable, and payroll functions. In order to commit fraud, it helps to have access to money and accounts. Employees who submit expense reports are also prime sources of fraud, especially if your internal controls are weak.

So, let's start with the basics. Train your employees so they understand company policies and procedures. Make sure they know and follow all rules and guidelines. And make sure they understand the repercussions of committing a fraud – up to and including criminal prosecution.

After an internal company review, put the following processes in place and train employees to follow these processes. Internal training should include:

  • Creating separate duties with checks and balances built in. Require multiple approvals for expenditures. Have multiple employees keep the books, handle payroll, make deposits, and reconcile bank statements.
  • Cross-training employees to perform basic financial functions. Relying on one person to handle a financial process makes it easier for that person to commit fraud.
  • Training employees to perform basic internal audits – outside of their normal work area. Oversight is a great deterrent.

Then focus on training employees to identify external sources of fraud, including identity theft.  Teach employees to watch for:

  • New account fraud – setting up accounts based on stolen identity or personal information
  • Credit card fraud – using credit cards without authorization
  • Check fraud – using checks without authorization, or using fake checks
  • Phishing – fraudulent attempts to get personal or company information that can be used to perpetrate identity theft
  • Identity theft – using another individual's personal or financial information without his or her consent
  • Invoicing for products or services that were never provided
  • Invoicing for over-utilization of services (i.e. billing for unneeded services; the services were performed but were not needed or requested)
  • Kickbacks

The key to providing effective training is to first determine what policies and procedures you wish to put in place. If you run a retail operation and you wish to reduce identity theft, for example, you may decide employees should verify two forms of identification before accepting checks or credit cards. If that is your policy, train your employees and monitor that they, in fact, consistently follow the policy.

The same is true for internal controls; if you decide one employee should verify the accuracy of incoming shipments at the receiving dock, and another employee should double-check the accuracy of items received before placing them into inventory, train employees appropriately and then check periodically to make sure your policies are being followed.

Establish set procedures for what employees should do if they suspect internal or external fraud. Your procedures for handling external fraud can be straightforward and should not require significant judgment on the part of the employee. For example, if a cashier suspects that a customer is attempting to use a stolen credit card, they should immediately notify a member of management before proceeding further.

With internal fraud, the actions taken may not be so clear-cut, because many employees will hesitate to accuse others of illegal or unethical behavior. Create a climate of trust by establishing a confidential way for employees to share their concerns. Confidentiality protects the whistle-blower and the alleged perpetrator; if the accusations are unfounded, no one needs to know there were ever suspicions in the first place.

To help prevent fraud, thoroughly train your employees, and then follow up to make sure that training is consistently put into practice.

 

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC

Popular Posts

  • Fall-Is-The-Season-Of-Giving-Choose-Your-Business-Charities-Carefully

    Choose Your Business Charities Carefully

  • How to Handle Tough Customers

    How to Handle Tough Customers

  • i

    Seven Ways to Improve Your Invoices and Get Paid Faster

  • w

    Will Asset-Based Financing Work for You?

  • t

    Training Employees to Help Prevent Fraud

check fraudcredit card frauddiscrepanciesemployee fraudemployee trainingexternalfraud preventionfraud prevention trainingfraud protectionfraudulent activityinternalinvoicekickbacksNevada Small BusinessNevada State Banknew account fraudNSBNVSBpayroll functionsphishing

Increasing Foot Traffic to Your Small Business
Company Vehicles: Lease vs. Buy

Related Posts

  • Card reading Life insurance

    Life Insurance Q and A’s For Small Business Owners

  • Economic Briefing December 2019

    Economic Briefing – December 2019

  • Economic Briefing

    Economic Briefing – May 2016

  • January 2021 Economic Briefing

    Economic Briefing – January 2021

We help Nevada’s small businesses succeed.

Hosted by Nevada State Bank, we're a one-stop digital resource center for business owners, executives and entrepreneurs. Looking for advice from nationally known financial experts? You’ll find what you need here.

Nevada Small Business

  • Start
  • Grow
  • Manage
  • Survey Report
  • Economic Briefing
  • About Us
  • Contact Us

Newsletter Signup



Follow Us

Follow Us on FacebookFollow Us on TwitterFollow Us on LinkedInFollow Us on YouTube

The information contained herein may not represent the views and opinions of Nevada State Bank or its affiliates. It is presented for general informational purposes only and does not constitute tax, legal, or business advice. Clicking any of the links to 3rd party sites will direct you to a website that is not affiliated with Nevada State Bank or Zions Bancorporation and may have a different privacy policy and level of security. Nevada State Bank and Zions Bancorporation are not responsible for, and do not endorse or guarantee the privacy policy, security, accuracy or performance of that site or the information, products or services that are expressed or offered on the site.

 Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC | Equal Housing Lender
© 2021 Zions Bancorporation, N.A. All rights reserved.

Online Privacy Statement

Warning: You're about to leave the website!

You are about to leave Nevada State Bank's website and be directed to a website that is not affiliated with Zions Bancorporation, N.A. dba Nevada State Bank or Zions Bancorporation and may have a different privacy policy and level of security.

Zions Bancorporation, N.A. and Zions Bancorporation are not responsible for, and do not endorse or guarantee, the privacy policy, security, accuracy, or performance of the third party's website or the information, products, or services that are expressed or offered on that website.