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Is fraud a

problem in

your business?

"I don't have a problem.

There's no fraud in my


Chances are, you're wrong.

According to The Economist, over 85% of companies are already victims of fraud – and that’s just where fraud has been detected!

And if you’re a smaller business, it’s even worse. Your financial controls are probably not as good as they should be, and so you’re even more likely to be a victim of fraud.

There are 3 types of employee in every business

Honest Employee

The honest ones, who won't commit fraud, because it goes against their moral code.

Dishonest Employee

The dishonest ones, who are already committing fraud – or will definitely do so at some point in the future

Mostly Honest Employee

The mostly honest ones who will yield to the temptation to commit fraud if the opportunity presents itself - especially when times are tough

Can you really say that all your employees are honest? Not very likely.

"OK, so fraud is happening in my company. How much is it costing me?"

According to the Association of Certified Fraud Examiners, companies lose on average 7% of turnover to fraud.

That's a serious amount of money you're throwing away. And in tough economic times, it's even worse.

The problem is that the prevalence of fraud - and the amounts involved - are increasing at an alarming rate.

"Do I need to do anything about it?"

Yes, absolutely!

Can you really afford to continue losing huge amounts of cash every year?

There are also non-financial effects resulting from fraud - such as the negative impact on the company's reputation, bad publicity and the damaging effect on employee morale.

And on top of that, you are probably legally required to do something about it. In most countries, legislation and corporate governance rules require you to have an anti-fraud reporting mechanism in place.

This is covered in International Auditing Standard 240, the King II corporate governance codes, the Companies Act, Sarbanes-Oxley, and so on, depending on where your business is based.

"What type of fraud are we talking about?"

Broadly speaking, fraud involves any illegal activity which results in a loss for the business. This typically includes:


This is when employees steal company assets. For example, these employees might be taking office supplies or products the company sells without paying for them. It might even involve the theft of confidential information or intellectual property (such as trade secrets).


This is the illegal use of funds by someone who controls those funds. For example, someone might be using company money for their own personal needs, or illegally paying company money into a third party bank account. It might also involve manipulating the payroll records, financial accounts or creating false expense claims.

Bribes, Kickbacks & Payoffs

This is when employees accept cash or other benefits in exchange for access to the company’s business or preferential treatment. In many cases, the company ends up paying more for the goods or services than necessary, and the employee ends up pocketing the extra money. It might also involve awarding tenders or contracts to suppliers in a preferential way without going through the correct procedures.


This is when employees take money from receipts or petty cash and they don’t record this in the books.

So, we know that fraud is happening in your business. And we know that it's costing you a lot of money.

The problem is that whatever you're currently relying on to identify fraud in your business isn't working very well. Here's why ...