Ways to Prevent Fraud in Your Organization

A photo of a contract in the background. In the foreground, two peoples hands are shaking and there is a $100 bill between them.

Any organization is susceptible to fraud within their organization. From theft of cash, or materials, to payment fraud or expense schemes, fraud can cause an organization to lose significant amounts of money.

Often, when someone suspects an employee may be stealing from their business or organization, they contact us and ask for an audit. However, as we discussed in this blog, while an audit CAN detect fraud, that is not its purpose.  If you’re focused on preventing fraud, we offer services such as Internal Controls projects to help set policies in place to protect your organization. If you suspect fraud is already happening, we can perform a Forensic Audit, which uses specific investigative techniques designed to find illegal activity and produce the evidence you can use in court. Here are a few things to know about fraud to help prevent it from happening within your organization.

Common Fraud Within Entities

There are various type of fraud, but the type we’ve seen most often is asset misappropriation.  Asset misappropriation is when cash or noncash items are stolen from the organization. This can range from stealing/selling private organizational data, making a false reimbursement claim, stealing organizational equipment like a laptop or gas card, creating false invoices, or even creating a system where a vendor gets overpaid and the employee gets a kickback.

How Fraud Happens

A triangle with the word FRAUD in the middle. Each side has a label saying "pressure" "opportunity" and "rationalization"

It is hard to imagine a trusted or long-time employee could be engaging in the act of theft, but it tends to happen when all three sides of “The Fraud Triangle” are triggered. 

The person is strapped for cash and/or under significant financial pressure. He or she may need money for a variety of things like unexpected healthcare costs, loss of income during/after a divorce, or maybe they have gambling/shopping addictions.

The person is feeling financial pressure and tell themselves “I’ll only do it this one time”, “I’ll take the money now, but pay it back as soon as I can”, or “I have worked hard over the years and they owe this to me, but they’ll never pay it”.

The person finds a vulnerability within the internal controls and takes advantage of it.

Ways to Prevent Fraud

For organizations, the biggest challenge in regards to the triangle is the side labeled “Opportunity”.  Most instances of opportunity result from outdated or weak internal controls.  Internal controls are the protocols, procedures, and activities that protect organizations from financial, operational, and strategic risk. Scroll over the icons below to read some examples of internal controls a local governmental entity should consider implementing:

Checks & Balances

No one person should have sole control of a financial transaction. For instance: Set a dollar amount threshold & require a 2-person approval for any transactions exceeding the amount.

Use Software for Payments

Avoid paper checks and cash whenever possible. BILL is an option for both expense reimbursement and vendor payments.


Your internal controls and all transactions should be clearly documented and the documentation should be readily available.

Monthly Reconciliation

Have someone who does not complete bookkeeping reconcile or review the books to compare the reported accounting data to source documents.

Hire Avizo’s Internal Control Experts

Of course, even a good system of internal controls might have vulnerabilities, so it’s important to regularly perform internal and external audits to test the processes you have in place. Our team is experienced in helping organizations develop their process, set their policies, and identify software options. If you’re confident in your existing internal controls, we can also provide testing to check for vulnerabilities within your organization. Click the button below to set up a meeting to learn more.

Headshot of Kirsten R.

Kirsten Robertson

A Strategic Analyst on our assurance team, Kirsten maintains expertise to provide auditing services with a specialization in Avizo’s governmental and construction-based niches. She is one of the primary leads on our in-field audits and completes training for all members of the firm before they visit clients offices.

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