Dear CEO: How Immune Is Your Business To The Risk Of Fraud?

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Dear CEO: How Immune Is Your Business To The Risk Of Fraud?

Dear CEO: How Immune Is Your Business To The Risk Of Fraud? – Adeniyi Bamgboye

The success of every businessman depends on his ability to make a decent return on investment and make reasonable profit while the hallmark of every professional lies in his or her ability to commercial his skills, knowledge and expertise. We all know how challenging doing business in our clime can be. Not to mention issues such as unstable electricity, poor transportation system and lack of infrastructural facilities plaguing our economic growth and development as a nation. Adding the risk of fraud which is the subject matter of this article would be tantamount to adding salt to injury of a typical Nigerian entrepreneur because he already has enough giants to contend with.

This piece was written by Adeniyi Bamgboye Emmanuel. The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of

Fraudulent activities within an organisation will not only serve as a clog to the wheel of progress of such an entity in terms of causing a drastic reduction in its profitability on the short term, and its ability to continue to operate as a going concern in the  long term.

An old cliché says “an ounce of prevention is worth a pound of cure”. Prevention measures should not be handled with kid gloves. Large corporations and many medium and small companies do not like to prosecute fraudster since they rationalise that it could hurt their image. Businesses can be victims of fraud in three areas.

The first area is that which relates to the customer. This common fraud involves the customer walking into a business area thereby stealing goods that are on display. It is either concealed in bags, undergarments, or elsewhere. Tracking this shrinkage can be done through an educated observation of the customer while in action. Most business owners now deploy the use CCTV cameras; even go to the extent of snapping and pasting the pictures of offenders at strategic and visible locations within the store. This is to serve as a deterrent to those who may be nursing such shoplifting ambition in the future. For professionals who are into the business of exchanging ideas and by extension, service delivery, it is worthy of note to say that plagiarist are on the prowl which makes it highly imperative for such  professionals to get sufficient copyright protections  for their ideas and initiatives.

Secondly, employee fraud is also another area worthy of mention. Most employees are not dishonest when they are first hired. They only become dishonest when the opportunity becomes available. The onus now lies on the business owner to ensure those avenues for fraudulent activities to take place are always blocked. There is high propensity for this type of fraud to occur when elements such as the items of value, perpetrator and opportunity are in tandem with one another. Employee fraud usually involves cash register thefts, payroll falsification, issuing fraudulent refunds, embezzlement and check kiting.

Hiring honest employees is crucial. A background check can be conducted to ensure the company is about to employee the right person. This exercise will depict the character, credit history, public records and references of such applicant and also help to properly evaluate the applicant with regard to his or her fraud potentials. The employee, after being hired should be provided with an environment that will discourage dishonesty. Treating employees fairly can do this although, there are still some con artists, regardless of precautions taken, that are still capable of “take your shoes, while you are standing in them”.

The last element of fraud relates to the vendors and suppliers. Businesses face vulnerabilities through kickbacks which may involve the sale of unreported stocks, which are sold and shared by the vendor and employee. The perpetrators of the fraud may also make the business pay for inventory at inflated and unreasonable prices thereby sharing the portion of the excess. This is likely to occur in a business environment where the same vendor is constantly used, the purchasing manager does not take any vacation time, and inventory shows more goods in stock whose availability cannot be accounted for.

Finally, one of the best ways to prevent your business from fraud is to prosecute any employee who commits it while others includes establishing, maintaining and adherence to internal controls,  installing various detection devices for customers – oriented business and also restricting  access to only certain employees where customers and other employees have no business or need. Establishing high moral and ethical standards within the organisation is also very important. Things aren’t too rosy in the country at these austere times to start losing those meagre profits you’ve struggled to make for your business to some racketeers and fraudsters.

By now, a CEO should be able to provide an answer to the subject of this article as regards the level of immunity his or her business has to fraud related risks and exposures.

May we all thrive, and not just survive.

Adeniyi Bamgboye is a consultant who focuses on accounting, audit, tax and business advisory. He trained with EY. He holds a MBA in financial management. He is a member of Association of Certified Chartered Accountant (ACCA), Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Institute of Taxation of Nigeria (CITN). He can be contacted via

The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of



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