Internal controls are the backbone of any small business, whether it’s a doctor’s office or a retail operation. Without them, your business cannot function effectively or profitably.
Here’s what the Association of Certified Fraud Examiners (ACFE) found in their 2014 Report to the Nation on Occupational Fraud & Abuse:
- The median loss caused by fraud was $145,000
- 22% of cases lost at least $1 million
- 85% of cases dealt with asset misappropriations
- 39% of cases were corruption schemes
- 9% of cases dealt with financial statement fraud
Additionally, the ACFE noted that smaller businesses (less than 100 employees) tend to suffer disproportionately large losses compared to larger companies. Employees committed 42 percent of frauds. Collusion – more than one perpetrator – resulted in the largest losses.
The good news is that organizations with internal controls fair better than those without. Here are three ways to ensure internal controls are effective in your small business.