An international survey by accounting firm Grant Thornton has found just 40% of private businesses in Australia have specialist staff in place to detect and prevent fraud.
Australia sits slightly below the global average of 45%, and well below the Philippines, which has the highest percentage of businesses employing specialists to detect fraud (72%).
Employee fraud is a huge problem in Australia, with some estimates putting the annual cost at $18 billion.
Tony Markwell, national head of privately held business at Grant Thornton, says the staff member most often charged with detecting and preventing fraud is an internal auditor. “It’s someone in the organisation whose role is to look after the checks and balances,” Markwell says.
Employing a specialist might be a stretch for a small business, but Markwell says most small businesses fail to have any procedures in place at all for finding fraud. There are typically two reasons businesses slip up on fraud. Owners often neglect to improve the oversight of key financial functions as their business grows, and in many cases they simply trust one or two key staff too much. “In smaller organisations, they are your most devastating cases.”
Markwell nominates three red flags business owners should watch out for – employees living beyond their supposed means, suspicious behaviour, and warnings from other employees.
Markwell says most fraud is detected by whistleblowers, so companies need to ensure they are prepared to protect employees who uncover fraud. “It’s about having a culture where people who know something is wrong can come forward and talk to you in private without being ridiculed or not believed.”
Read more on fraud
TOMORROW: Don’t miss our top story on employee fraud. It’s full of tips on how to make sure you don’t get stung.