5 TOP FRAUDS FOR SME’s.

1. Payroll fraud.

Payroll fraud occurs in 27 percent of all businesses and twice as frequently in small businesses (fewer
than 100 employees) than larger ones. Owners must gain a working knowledge of the payroll system
and enforce accountability among book keepers in their monthly reports. Since payroll complexities
significantly increase as a company grows, especially if overtime is a factor, owners have to maintain
consistent scrutiny.

2. Cash theft.

Cash has a funny way of disappearing in a small businesses. Whether through skimming (when an
employee takes cash that hasn’t been reported into the accounting system), larceny (when an
employee takes cash that has been reported) or fraudulent disbursement (when an employee releases
funds that haven’t been authorized by the owner), cash theft creates a negatively cumulative impact
on the bottom line. From the outset of setting up a business, an owner needs a streamlined cash
monitoring process, both for an effective financial process and also to maintain essential supervision
of cash within the business.

3. Online banking.

The increased popularity of online banking has also increased the likelihood that funds could be
transferred to erroneous accounts. Owners should schedule regular meetings with the accounts team
to monitor all transferred money. Cybercrime has never been more sophisticated, and small business
owners need to arm themselves with updated information on threats to respond accordingly with
their relevant financial institution.

4. False invoicing.

Business owners must have basic oversight over every vendor in her business because false invoicing
is an increasingly popular fraud method. It often strikes when an employee creates false suppliers or
when he pays a legitimate supplier and diverts the cash into an alternative account.

5. Invoice email.

This scam often involves perpetrators who pose as legitimate suppliers and advise changes to existing
payment arrangements. The fraud may not be detected until it's too late -- when the business is
alerted by complaints from suppliers that payments were not received. Regular account check-ins can
help guard against business owners falling victim to this type of fraud.

Reasons why FRAUD thrives

 Inadequate segregation of duties or independent checks.

 Lack of mandatory vacations for employees performing key control over automated records
 Inadequate oversight of senior management expenditure
 Inadequate job applicant screening
 Inadequate management supervision of employees responsible for assets
 Inadequate record keeping
 Inadequate system of authorization and approval of transactions
 Lack of complete timely reconciliation of assets
 Inadequate management understanding of information technology
 Lack of timely and appropriate documentation of transaction