Businesses that operate from multiple locations — such as retailers, restaurants
A robust, multi-location antifraud strategy includes:
Pre-employment vetting. Background checks help identify previous misconduct and signal to would-be fraudsters that the business is committed to ethical operations.
Formal written policies. Policies on cash handling, credit card data protection, returns and refunds must be formalized, monitored and updated regularly.
Training. A company’s employees are its first line of defense against fraud. Education programs should explain the business’s antifraud controls, warning signs of common fraud schemes and the role employees play in preventing financial losses.
Business owners also should consider setting up anonymous reporting hotlines. Studies conducted by the Association of Certified Fraud Examiners consistently find tips to be among the most effective tools in early fraud detection.
Employees who have access to a company’s books, incoming mail and bank account may be able to commit various fraud schemes and prevent their discovery. Segregation (or separation) of duties can help prevent that from happening. For instance, a business might outsource payables and receivables to a third-party provider, receive mail for all locations at one centralized office, and require individual store managers to deposit daily takings according to strict procedures. Periodic job rotation, mandatory vacation policies and surprise audits also make it harder for dishonest employees to steal and avoid detection.
For added protection, a forensic accounting professional can conduct a fraud risk assessment to document existing internal and external fraud threats and recommend cost-effective controls to mitigate those risks. It’s possible that some locations are better protected than others, which helps management focus on high-risk sites.
New technologies can help reduce fraud risks in multiple locations. For instance, owners can remotely access point-of-sale systems to monitor transactions. Or they might install live cameras to conduct store surveillance remotely.
Managers can also use artificial intelligence tools to spot behavioral red flags. Examples are employees who process excessive returns or refunds, excessive inventory turnover, and higher-than-expected costs relative to sales. Such red flags don’t prove fraud, but they provide a starting point for further investigation.
By mapping out effective control systems, multi-location businesses can manage fraud risks before they spiral out of control. A forensic accounting professional can help devise strategies to reinforce a business’s controls without throttling growth.