Cost-cutting can lead to weakened controls
TORONTO, March 31 /CNW/ - Private companies need to be aware that the post-recession landscape can create a perfect storm for fraudulent activity, according to PricewaterhouseCoopers (PwC).
"In a global economic downturn, need comes to the forefront and becomes intermingled with greed and opportunity," says Sarah MacGregor, a director in PwC's Consulting and Deals practice and Investigations and Forensic Services group. "Previous cost-cutting and downsizing efforts can lead to weakened or non-existent controls and ultimately financial fraud."
Companies that do not increase their vigil over economic crime risk negative impacts such as lower employee moral, business relations, brand and company reputation. A recent PwC Global Economic Crime Survey shows that 56% of Canadian companies reported being victims of economic crime in 2009.
PwC offers a top 10 checklist of preventative measures for private company owners:
- Ensure physical safeguarding and appropriate oversight of cash
- Perform timely reconciliations and independent reviews
- Mail cheques immediately after signing
- Develop fraud risk indicators as part of your fraud risk assessment
- Have good corporate governance and strong internal controls
- Ensure employees take their full vacations each year
- Hold fraud awareness sessions with employees
- Set up an anonymous hot line
- Prepare an investigative protocol
- Know your employees
"People will stop committing fraud if they think there's a crackdown, particularly when anti-fraud measures are put in place, and communicated throughout the company," says MacGregor.
The "Let's Talk" series of articles from PwC's Private Company Services (PCS) group helps business owners think about topical issues and opportunities that can affect their business performance.
For more information and the full article, please visit http://www.pwc.com/ca/private.
About Private Company Services (PCS)
More than 65% of PwC Canada's clients are private companies, ranging from owner-managed family businesses to large, professionally managed businesses. PwC's Private Company Services (PCS) group is a dedicated team of business advisors who help private company owners to help them resolve day-to-day business issues and achieve long-term success. PCS offers the perspective of a third party with professional industry knowledge, business advisory, tax and accounting experience.
For more information about PwC's Private Company Services, please visit www.pwc.com/ca/private.
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