smallbusiness.co.uk: Helping your business think big

According to The Fraud Advisory Panel (FAP), SMEs undergoing rapid expansion face an increased risk of fraud.

The Panel, an independent body that is supported by the Institute of Chartered Accountants, said that SMEs "often miss the danger signs [of fraud] especially when business is booming."

To help growing SMEs protect themselves against theft and fraud, the FAP has produced a new guide – Fighting fraud – a guide for SMEs. The publication advises on the different types of fraud to look out for including “stock shrinking,” “changes in cash flow patterns” and “customer complaints.” These types of fraud, it says, are often overlooked by small ventures.

The growing popularity of outsourcing and the introduction of stakeholder pensions could widen the risk further, the study reveals. In the case of pensions, the development of stakeholder pensions could create problems in the future as pensions involve new payroll procedures and cash transfers to pension providers.

The guide contains a checklist of fraud prevention methods and also advises on how to go about managing the prevention, detection and prosecution of fraud. It provides guidance on a whistle-blowing policy, and the recruitment and training of personnel.

According to the booklet, most fraud is usually committed by a company’s own staff. To back up this claim, it provides a typical case study of a temporary employee giving a false address that was never checked. The employee stole a company chequebook and used it to buy expensive goods for himself. By the time he was found out, he had left the company and could not be traced.

The guide can be downloaded from the Fraud Advisory Panel section of the Institute of Chartered Accountants’ website at www.icaew.co.uk .

With thanks to Lloyds TSB Success4Business. For more news and information visit www.success4business.com.

(27/2/02)