The Association of Certified Fraud Examiners expects employee embezzlement to increase by 71 percent over the next 12 months. Is your family business prepared?
One of the simplest steps to take is regularly checking your bank statements. “I know that those of you that are business owners may think, ‘Oh, I don’t have time, I have people to do this for me,’ but I will tell you, you will catch a lot of things if you periodically run and check the bank statement, just scroll through and see what a few things are,” says Kristen Spence, Fraud & Litigation Manager for Hungerford Nichols CPAs + Advisors.
Other topics discussed during the 30-minute podcast include how to spot red flag warnings in payroll operations, securely manage manufacturing inventory, and reduce risk by implementing proper internal controls.
Those formal internal controls are especially important for small family-run businesses, says Katy Felver, Business Advisor for Hungerford Nichols CPAs + Advisors. “It’s a little bit more challenging to put internal controls in place [but] it is possible,” she says. “And it isn’t because I don’t trust you, it’s because we’ve got to have each other’s backs. We always have to make sure that we’ve got it like you’re watching me, I’m watching you. We’ve got transparency and honesty going on,” continued Felver.
For any business owner, there is no substitute for knowing your employees and knowing what’s going on.
“Kind of my motto is when you’re a business owner, if you’re able, keep your finger on the pulse of what’s going on in your organization,” Spence says. “And a good way to do that is, honestly, hang around the water cooler. Get to know your employees. And if they are comfortable with you, eventually, they will start telling you things that they wish they had told you,” she stated.
Spence and Felver shared their advice for managing fraud risk when they were interviewed by Sheri Welsh for The Welsh Wire podcast, sponsored by the Family Business Alliance.
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