5 Basic Steps to Prevent Fraud

Any organisation is susceptible to fraud. It is simply a fact of life. Similar to the current pandemic it affects all levels of society, irrespective of whether the organisation has commercial or not for profit motives. However, what is interesting is that fraud within the charitable sector tends to be reported more often than not. This is likely due to the fact that a charity’s employees or volunteers usually have a good code of ethics.

So, what internal controls and procedures can employers in any sector implement to reduce the risk of fraud? Below are five steps which could significantly reduce the risk for businesses of any size or type.

Step 1. Check your structure

The structure of an organisation is paramount to any review process. A recent report identified that most frauds result from excessive trust being placed in an individual coupled with a lack of supervision. Therefore, a solid and clear chain of command is a priority.

Step 2. Ensure financial controls are in place

There are numerous financial controls that can be put in place by organisations to help reduce the opportunities for fraud to occur. Some of these include:

  • having more than one signatory for bank transactions;
  • having more than one-person count cash collections;
  • regularly reconciling transactions and bank statements; or
  • having adequate transparency of financial management processes.

Step 3. Implement adequate internal code of conduct and ethics

Unsurprisingly a lot of frauds are identified by co-workers, as they can identify unusual behaviour or deviations from procedure by colleagues. Therefore, it is vitally important that employees should understand the ethical standards expected of them from the outset. 

This, therefore, should be set in stone by having an adequate code of conduct and ethics in place. Such a code should be enforced and reinforced through regular training. This will make sure the staff know what to look out for and reinforce the negative repercussions fraud has for all involved.

Step 4. Implement an adequate process for reporting suspicions

A code of conduct and ethics will also outline the process for how, when and to whom suspicious activity should be reported. Depending on the size and nature of the business, an anonymous hotline may need to be made available for employees to notify management of their suspicions.

Step 5. Take reports seriously and investigate

In order to support and reinforce this zero-tolerance culture, senior management must take any report seriously and commit to investigating it fully. Therefore, it is vital to have a fair and lawful investigation procedure already in place which outlines:

1. who will investigate the issue;

2. which measures will be used;

3. the investigation timeframe; and

4. the possible outcomes of an investigation.


Need advice? Proelium Law is here to help you. We are continuing to work during this difficult period. Call or email us if you have an enquiry, we will call you back at a time convenient for you.

Martin Cartwright is head of Investigations at Proelium Law LLP.  Martin has over 20 years’ experience in investigations and investigative management having worked in both the public and private sectors. Martin holds a BA (Hons) in Applied Investigation and represents Proelium Law LLP on cases both in the UK and overseas in high risk jurisdictions as well as complex environments.



Need advice?
Contact us to discuss your requirements and how we can help 

Proelium Law LLP

Proelium Law LLP is a Limited Liability Partnership registered in England and Wales No.OC411568.

Proelium Law LLP is authorised and regulated by the Solicitors Regulation Authority No. 629608 (www.sra.org.uk)

VAT Registration No. 242 4002 59

D-U-N-S Number 21770643

 Copyright © 2020 Proelium Law LLP All rights reserved. Use of this website constitutes acceptance of the Privacy Policy.  Web Consultancy | Pier9

Pin It on Pinterest