Explain the scope of fraud and why it impacts small businesses to a greater extent than large businesses. What should the owners or managers do to prevent fraud from occurring in the first place?
Fraud impacts a small business to a greater extent that large business in that there are not enough safe guards in place to protect the small business.
Cash Theft:
In a small business if there are many people handling the cash transactions then it could be easier for cash theft. There should be oversights in place to check for cash theft loss. Each cashier should have their own secure registers and at the end of the shift another person, either a supervisor or business owner should tally the receipts against the cash to see if there are any overage or shortages and problems should be immediately corrected. A surveillance system with camera should be in place covering each cash register.
Credit Card Number Theft:
In a small business customers’ credit cards should be securely handled without keeping the full credit card number on receipts. The customer’s credit card numbers should be x’ed out to prevent others from using the credit card for fraudulent purposes. A surveillance system with camera should be in place covering each credit card transaction.
Credit Card Fraud:
A customer could use a fraudulent credit card to make transactions. The small business should have safe guards in place to prevent this. Checking identification so that it matches the credit card holder is one way to prevent fraud. Keeping name, address, and phone numbers of customers can also help in preventing fraud. Also a noticeable surveillance system with camera should be in place covering each transaction will also help to prevent fraud..
Inventory Theft:
Periodic planned and sporadic inventory reconciliation should be performed. This will reduce the amount of inventory theft. A surveillance system with camera should be in place covering all inventory locations.
Employee Time Abuse:
Employees in a small business may overstate their hours easier than in a larger firm. An electronic time clock with individual personal employee codes could be used to minimize employees overstating their hours. A surveillance system with camera should be in place covering all time clock locations.
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