Seven ways to protect your business after discovering fraud

read time: 2 min

1. Act rationally and stay calm

Actions such as on the spot firing could actually do more harm than good. Instead, act rationally, develop a plan, gather evidence, and act in the interests of your company.

2.    Be discreet 

You do not want to alert those committing a fraud that you are on to them. At least for the time being. If the fraudster finds out you are on to them, they may destroy the evidence to cover their tracks, which will complicate things further. You will need to properly investigate and gather evidence which demonstrates the fraud, without being obvious. 

3.    Secure your IT system

Place all relevant Microsoft email accounts on “litigation hold”.  “Litigation hold” uses the LitigationHoldEnabled property of a mailbox to place mailbox content on hold. It preserves deleted items and also preserves original versions of modified items until the hold is removed. You should already be backing up your financial documents and company information. If you are not already – it is time to start. 

4.    Prepare to hire 

Once irregularities and fraud have been discovered, the minimum consequence is likely to be the termination of the employee, worker or officer’s contract. This means that you may need to hire a new employee, worker or officer to fulfil the newly open role. As fraud is often committed by those in positions of power and trust, finding a new replacement for a high- level position may be challenging. Prepare for this possibility as early as you can. 

5.    Protect your reputation 

The trust of your customers, employees and partners are invaluable assets in any organisation. If the situation is mishandled, fraud could be a huge blow to your reputation. If you act decisively, fast and rationally, you will certainly suffer less damage to your reputation than if you ignore the situation till later. Make sure they all know the truth, and what you have done/are doing to correct the issue. You might need to issue a formal statement. Advice should be sought in connection with the wording of any formal statement before it is issued. 

6.    Set an example 

Once fraud has been recognised, there are many options you can take: a civil lawsuit, and/or notifying the police who may bring a criminal prosecution, and/or termination of contract. Employers should opt for severe penalties. Although it may appear harsh, especially if the person that committed the fraud was a friend and trusted employee, the rest of your organisation need to be aware there is a zero tolerance policy on fraud.

7.    Reach out 

Notify the business’s accountant and seek legal advice on the situation, the action you should take in the short term, and your long term options. A legal professional may be able to recover the loss the business has sustained in full, or at least in part.

If you have discovered fraud within your business and require advice, representation, or support, please contact Cara White.

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