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Fraud Management Best Practices

Employee fraud is one of the biggest problems businesses face — but not all businesses make fraud management and prevention a top priority.


This neglect comes at a great cost. As the Association of Certified Fraud Examiners (ACFE) makes clear in a recent report, businesses typically “lose 5% of revenues in a given year as a result of fraud.” Whether because of asset misappropriation, financial statement fraud or corruption, losses add up and have the potential to cripple an organization if left unaddressed.

Companies that embrace case management for fraud investigations and other fraud management best practices largely avoid these damaging consequences. Here’s a brief look at the attitudes and actions shared by these vigilant organizations:

Acknowledge the problem exists. The company’s leadership (board of directors, senior management, etc.) actively promotes and enforces compliance, recognizing that fraud is a potential threat that can’t be ignored.

Diligently secure all assets. In these organizations, the security of data, cash and physical assets is never left in doubt. Employee access to sensitive assets is strictly limited and questionable practices, such as signing blank checks and a lack of disbursement review, are not tolerated.

Communicate fraud management policies to all employees. No employees in a best practices company can complain they “don’t know” about the consequences of fraudulent behavior. It’s understood throughout the organization that accusations of fraud are thoroughly investigated and, if necessary, punitive measures will be taken.

Businesses “must also ensure that education and training sessions are held for all employees, which helps them understand their role in any potential breach,” says ACFE President James Ratley. “Training can also have a deterrent effect by letting employees know that the company is serious about stopping internal fraud.”

Segregate duties and responsibilities. Job activities are divided so no single employee exerts undue responsibility in a given area. Accounting and account payable functions are kept separate. An employee with custody of checks is not granted check-signing authority. Internal controls are created, enforced and monitored on a regular schedule, and upgraded with the latest fraud management software.

Establish a clear-cut reporting system. Along with comprehensive education and training, employees have access to anonymous reporting systems — often in the form of a “tip hotline” and/or website function — where they can report suspected incidences of fraud. Those employees tempted to commit fraud will be understandably much more hesitant, knowing that “everyone is watching.”

Audits are both expected and unannounced. To further minimize fraud, regular independent audits are performed to verify compliance with established policies. Surprise audits are also conducted from time to time, which ensures that employees are kept “on their toes.”

Hiring policies emphasize a thorough background check. Best practices companies place a high priority on qualifying job candidates. Only after conducting a careful review of references and a thorough background check (encompassing past employment, criminal history, credit, etc.) is a candidate officially hired.

If your organization hasn’t incorporated anti-fraud best practices into your day-to-day operations, you risk severe damage to your brand, a loss of revenue, decreased customer loyalty and even significant legal exposure.

Arm yourself with the best anti-fraud management resources available today. State-of-the-art investigation management software offered by Column Case Investigative employs a visual guide that enables businesses to identify relationships and establish connections — key elements in any successful fraud management program.

Learn more about how Column Case Investigative can help protect you against fraud. Contact us today!

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About Column Case Investigative

Focused on the real-world needs of organizations handling investigations, Column Case Investigative is a workflow-driven, web-based case management solution for investigation management. Best practices case management features such as access control, activity tracking, reporting and compliance help your organization be more organized, efficient and profitable in managing investigations.