One thing accountants do is look for possible fraud when they’re auditing business’s books. Recently the Journal of Accountancy published an excellent article on spotting fraud in your business. Here’s the lead from that article.
Every organization faces some risk of fraud from within. Fraud exposure can be classified into three broad categories: asset misappropriation, corruption and fraudulent financial statements. Answering the following 15 questions is a good starting point for sizing up a company’s vulnerability to fraud and creating an action plan for lessening the risks. The questions are based on information from the 2007 edition of the Fraud Examiners Manual published by the Association of Certified Fraud Examiners.
You can read the full list of questions on the Journal’s site. I want to highlight the question bout background and reference checks: “Does the organization conduct pre-employment background checks to identify previous dishonest or unethical behavior?”
Here are some of the checks that the Fraud Examiners suggest that you consider for “any key applicant.”
Background checks you can order:
criminal records and convictions
credit history
Social Security number trace
driving record
Checks that you should do yourself include:
previous employment
employment references
personal references
education verification
professional license verification
Checking into the background and qualifications of everyone you consider hiring should be a common business practice for you. It can help protect you from both workplace violence and from fraud.