Last August, the Association of Certified Fraud Examiners (ACFE) reported the results of its survey on occupational fraud and abuse. According to its findings, U.S. organizations lost 7 percent of their annual revenue to fraud! How sad.

The study found that check tampering and fraudulent billing were the most common small-business scams. Check tampering accounted for a quarter of small-business frauds, making it much more common than in larger organizations. Check tampering commonly occurs in situations where duties related to the cash-disbursements function are not separated. No one person should be in of charge of okaying payments, signing checks, recording payments and reconciling bank statements.

Ways to stop fraud

We recommend that small businesses take several steps to identify and prevent fraud that can add up to big losses. These steps are:

1) Instituting internal controls to prevent and detect fraud.

2) Fostering a company culture that does not tolerate unethical behavior.

3) Developing and distributing a written code of ethics for management and employees.

4) Training employees in fraud prevention. This would include teaching them the tell-tale patterns and signs of fraud.

5) Setting up procedures for reporting suspicious activity by customers and co-workers.

6) Regularly reviewing high-risk areas such as bank statements and inventory.

Everyone in the company should learn preventative techniques. After all, everyone from the stock boy to owner is harmed when a company loses money because of theft.

Unfortunately, we are in a deep and long recession. I expect to see an increase in small-business fraud.

– Jim Sturgill is a director of WorthPoint and founding partner of Sturgill & Associates LLP, a D.C. and Baltimore area CPA firm.

WorthPoint—Discover Your Hidden Wealth

You bet!

New Year’s resolutions should be achievable and make sense. Here are some:

1. Plan what you want the antique business to do in the upcoming week.  I have a friend who tweaks his antiques-business operation each Sunday evening. He is constantly changing how and where he buys inventory, displays it, advertises, etc.
2. Replace things that require your attention.  A computer that locks a jammed cash register or an employee with baggage distracts you from important chores. Replace them.
3. Become active in an organization that will benefit your antiques shop.  The chamber of commerce will provide many contacts. The historical society will put you in touch with people who have an intense interest in antiques.
4. Manage your time.  Study what you do daily. Keep written track of how long things take. When it’s in front of you in black and white, you’ll easily see if you’re wasting time. It may have become a cliché since Benjamin Franklin said it, but that doesn’t make it less true: Time is money.
5. Improve business promotion.  We all have ideas for business promotion. However, the cost of consulting with a promotion expert will be returned many times.

Make New Year’s resolutions few and simple. And then keep them.

– Jim Sturgill is a director of WorthPoint and founding partner of Sturgill & Associates LLP, a DC and Baltimore area CPA firm.

More Jim Sturgill Dollar & Sense columns

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WorthPoint—Get the Most from Your Antiques & Collectibles