Keeping an Eye on Fraud Deterrence

Getting away with fraud is no easy feat.  Perpetrators must go to great lengths to hide their illicit activities.  And yet they manage to pull it off all too often.  So is there a fraud deterrence measure you can adopt to thwart them without spending a small fortune?  There most definitely is.  Simply let them know you are watching.

“In this day and age, people are used to being watched,” said David Anderson, principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of fraud investigation and fraud deterrence programs in the Delaware Valley.  “Cameras are everywhere — at red lights, private residences and inside stores and out in the parking lot too.  And everyone’s got a camera on their cell phone. It’s no wonder criminal activity is down in areas where people are — or think they are — under surveillance.  The same is true regarding fraud.”

Anderson doesn’t advocate actual video surveillance of employees, but rather that organizations convey clearly to employees that they are watching for fraudulent activities at all times.  By implementing several relatively inexpensive steps, Anderson said organizations can let employees know that fraud deterrence is a critical organizational goal.

The first step is to develop and publish a code of conduct and an anti-fraud policy that lets employees know:

  • Fraud is unacceptable and will not be tolerated;
  • Every employee is responsible for being alert to the possibility of fraud;
  • It is the duty of every employee to not turn a blind eye to fraud; and
  • Management will be actively instituting one or more anti-fraud measures, including surprise audits, regular management review, mandatory job rotation, mandatory vacations, fraud training for employees and managers, and (possibly) the institution of a fraud hotline.

The next key step is to actually carry out the anti-fraud measures.

“Your fraud deterrence program isn’t going to work if you make a point about being on the lookout for fraud but then do nothing to indicate you are actually watching,” Anderson said.  “Besides, you don’t want to wait until you get to the point where you have to hire a Certified Fraud Examiner to conduct a fraud investigation.  You want to prevent fraud from happening.  If employees think you are watching, they might not be inclined to steal in the first place.”

Carrying out anti-fraud measures does not need to be expensive.  Anderson suggests a few well-timed surprise audits – of petty cash, bank accounts and inventory – sprinkled throughout the year.

“I particularly like a surprise count of petty cash at 4:00 p.m. on a Friday or the day before a holiday because there is a greater chance of petty cash being taken for use over a weekend or holiday,” said Anderson, a Certified Fraud Examiner who encourages companies, non-profits and government offices to enact a comprehensive fraud deterrence program created by an experienced firm that provides forensic accounting services in Philadelphia and the Delaware Valley.

Anderson notes that inventory need not be counted in total, but certain items that are high value, have a high turnover or are prone to fraud could be subject to a surprise count once a month.  Annual fraud training for employees and managers also is not financially burdensome – nor is a fraud hotline, he said.

“All of these measures let your employees know that your organization is serious about fraud deterrence and that employees are, in effect, under surveillance for illicit activities, ” Anderson said.  “Enacting these measures and then carrying them out will greatly reduce the potential for fraud.”

If you require the services of a Certified Fraud Examiner or any other forensic accounting services in Philadelphia and the Delaware Valley, please contact the Philadelphia forensic accounting firm of David Anderson & Associates by calling David Anderson at 267-207-3597 or emailing him at

About David Anderson & Associates

David Anderson & Associates is a Philadelphia forensic accounting firm that provides a full range of forensic accounting services in Philadelphia and the Delaware Valley.  The experienced professionals at David Anderson & Associates provide forensic accounting, business valuation, fraud investigation, litigation support, economic damage analysis, business consulting and outsourced CFO services.  Company principal David Anderson has more than 30 years of experience in financial and operational leadership positions and is a Certified Public Accountant, a Certified Fraud Examiner and a Certified Valuation Analyst.