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  • Steve Dawson CPA, CFE

Need for Anti-Fraud Program

Updated: Sep 21, 2021

So many companies don’t understand the need for an Anti-Fraud Program. “I don’t have fraudsters as employees, why would I worry about an anti-fraud program?”

They seem like such harsh, strong words—




Corruption. Exploitation. Bribery. Deceit.

People often associate these terms with obvious malicious individuals who set out to steal for pure profit. People who take jobs with the sole intention of defrauding a company for as much money as possible. You expect to be able to recognize a suspicious character the instant they are before you.

We would never hire someone we did not trust. We would never give responsibility to a person we thought was dishonest. We hire those we believe will join our company mission. Those we have confidence in to carry out their jobs to the best of their ability. Those we know will act honestly, in the best interest of the team. And for the most part, those are the individuals we get. We build great teams.

An anti-fraud program may seem like something you don’t need.

For this reason, most businesses do not have reliable defenses in place against fraud. In a perfect world, everyone acts as they should. Honestly and openly.

But here is the flaw.

The cloaked criminal mastermind out for their pure selfish interests is NOT the dominant profile of a fraudster. More often than not, a fraudster stumbles into stealing. They are family. Or friends. Or someone with a great resume and enthusiasm for the business. Someone who comes and performs their job with decent work ethic. But then something happens. A structure presents itself in their path. Often called the fraud triangle, almost all fraudsters meet 3 criteria:

1) They experience pressure.

People get into debt. A family member gets sick. A son or daughter needs

more for school. A spouse loses a job. There are endless situations that put

financial stress on a person. People find themselves pressured to make or find

more money somehow, someway to make their life, or the lives of their family,

a bit easier.

2) They have opportunity.

They handle money in their business with no accountability. They are the one

person handling all equipment. They see money available for taking,

unnoticed. They are not taking from paychecks (most times), so it is just

“extra” money that doesn’t affect anyone. The temptation to take it, or to use

it just for a little while, is great. It would meet their need.

3) They rationalize.

When they aren’t taking directly from a customer or a fellow employee, the

theft doesn’t seem as wrong. When moving dollars around in a computer, it

almost doesn’t seem like taking anything at all. They deserve it even, for the

hard work they do. And their situation in life needs a little extra right now.

Many fraudsters plan to someday pay back the money or resources they have

taken. Because someday, they will be in a better situation. And then, without

ever having harmed anyone, they will return what they owe. The debt will be

settled, and no one will ever even know. In reality, the need never really goes

away, or the fraud they have created becomes too big to “undo”.

Almost every single person meets this first criteria at some point in their life. Life simply has needs. Many companies have poor internal controls, allowing easy access and opportunities for theft. And with enough pressure, enough opportunity, and enough time to rationalize, an employee may make a choice that compromises their integrity.

The truth. Fraud costs small businesses an estimated 6 BILLION DOLLARS annually. Annually. Every year. Companies are deeply shaken by not only financial loss, but by the fact that relationships are ruined. Family, friends, healthy business connections destroyed. Whether you have 1 or 1000 employees, you need fraud protection.

The good news is that you can design a program that fits the needs of your unique business. You can provide the internal control to eliminate opportunity for your employees. By taking this leg away from the triangle, you significantly weaken the likelihood of loss. A strong Anti-Fraud Program even protects employees from suffering under the pressure of need by creating an environment where they can communicate needs in extenuating circumstances. A healthy morale and vision can inspire loyalty and defend against the temptation to rationalize wrongdoing towards the company. Working to eliminate this triangle can serve you and your business in a number of ways.

You are protecting your business, your employees, and your long-term goals for success. So much painful loss is easily prevented (or detected much earlier) by having a foundational anti-fraud program.

Consider your business right now. Do you have internal controls that defend against the realities of the fraud triangle? Could those defenses be stronger? Work on prevention today.

Empowering small businesses to develop strong Anti-Fraud Programs is our mission. We provide consultations to design, evaluate, and improve your anti-fraud program. You can also get a step-by-step guide to design a program that can be tailored for your specific needs by purchasing Steve Dawson’s book, Internal Control/Anti-Fraud Program Design for the Small Business.

If you think there may already be fraudulent activity within your company, contact us today through our website.

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