Despite your best efforts to run an honest business, you may be waylaid by allegations of fraud. Having a clear fraud risk management plan can help shield your company from the fallout of a fraud lawsuit.
Review the factors that contribute to fraud claims and strategies to protect your enterprise.
Keep detailed HR records
Often, fraud allegations stem from terminated employees who either make false fraud reports against the company or commit fraud under the firm’s name. Your business must have comprehensive documentation for all fired workers, including performance reviews, negative performance actions and the reason for terminating the employment relationship. These records can help refute this type of fraud claim.
Rely on professional assistance
Independent attorneys and auditors can provide support for fraud defense related to financial and legal documents. These professionals should review all business contracts to flag potential issues that may constitute fraud before they threaten the company’s reputation and livelihood. They can also keep your company updated on the latest compliance and regulatory issues in your industry.
Train leaders, employees and contractors
Everyone on your team should understand regulatory compliance and ethics as it applies to your business. Provide initial training about fraud avoidance and compliance as well as periodic retraining. This type of education program can help prevent fraud in your organization and support your defense if an executive or employee does commit fraud.
If a client accuses you of fraud or you detect fraud in your organization, consider self-reporting the incident to the Department of Justice and outlining your firm’s corrective actions. These proactive steps can help you avoid costly lawsuits, sanctions and penalties.
