PracticeAccounting FirmsSmall businesses get fraud warning

Small businesses get fraud warning

Small businesses are being warned to be extra vigilant in their fight against fraud, especially during times of rapid growth.

The Fraud Advisory Panel, supported by the ICAEW, says small and medium sized enterprises often miss the danger signs especially when business is booming and warns opportunities for fraud can increase with the growing use of outsourcing.

The introduction of stakeholder pensions also poses a serious threat to SMEs, according to the Panel.

The Fraud Panel’s Mark Prentice said: ‘Much has been written about fraud in big business – there is much less advice for directors and managers in SMEs.’

Recent studies show small businesses often overlook signs of fraud such as cash flow changes, stock shrinkage and customer complaints.

Stakeholder pensions could also create problems in the future with the introduction of new payroll procedures and cash transfers to pension providers.

To help small businesses protect themselves, the Fraud Panel has now published a set of guidelines, covering issues such as recruitment, training and whistle-blowing.

As Prentice said: ‘The risks need to be understood and managed.’

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