May 10, 2005 -- Many business owners believe that fraud can not happen in their company.  Comments of “I trust my employees” or “that person would never do something like that” are common misconceptions that could lead to loopholes in internal controls.

All companies, large and small, need to establish controls to mitigate the potential for the misappropriation of assets, which is the most prevalent type of fraud.  It is documented that smaller companies suffer more of a loss due to fraud than larger companies.  Per the 2004 Certified Fraud Examiners study, the median loss for small businesses was approximately $98,000.  This amount is huge, since most small businesses cannot afford to survive such large losses.

Companies need to establish strong internal controls to reduce the potential of fraud in their organization.  In addition, the establishment of a reward system in reporting the possible existence of fraud can also help to mitigate fraud.   Also, accounting firms often provide recommendations to strengthen areas of potential weakness.  So, don’t get caught up in the common misconceptions.  Protect your assets.

For more information, contact Kim Masson at 215-564-1900 .

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