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Losses conservatively hit $3.2-billion, survey finds
At least a quarter -- 26 per cent -- of Canadian small and medium-sized businesses, or 290,000 companies, were victims of at least one incident of workplace fraud last year, resulting in "conservatively" estimated losses of $3.2-billion, according to a survey by the Certified General Accountants Association of Canada.
And a slow economy could cause fraud to rise because of employees facing financial difficulties, the survey report warned.
The most common kinds of workplace fraud cited were misappropriation of inventory or assets, for 54 per cent, followed by misappropriation of cash, for 36 per cent, and misrepresentation of employment credentials, internal or external documents, for 25 per cent.
Behind them were corruption, at 19 per cent, theft of proprietary information and intellectual property, at 17 per cent, and asset or revenue overstatements or understatements, at 16 per cent, the survey of 802 companies with five to 499 employees found.
Individual losses among the companies that experienced fraud were for the most part not large: 55 per cent suffered losses of up to $1,000, 26 per cent were hit for $1,000 to $5,000, and 12 per cent suffered losses of $5,000 to $25,000. Seven per cent were hit for more than $25,000, with fewer than 1 per cent suffering losses above $200,000.
Nevertheless, 61 per cent said that fraudulent activities have a negative affect on employee morale, while 26 per cent said business relationships suffer, 24 per cent said it affected a company's reputation, 22 per cent said it eroded public or client trust, 21 per cent said it harmed a company's value, and 16 per cent said it impeded a company's ability to attract and retain employees, the survey found.
Incidents are not isolated. At least a fifth of the companies surveyed said they had experienced such fraud four or more times in the last fiscal year.
Yet many companies did not seem concerned they were at risk. Just 5 per cent said they believed it posed a high risk for them, while 74 per cent believed their exposure was low. One in 10 companies did not have fraud detection measures in place. And 11 per cent did not incorporate any particular fraud detection technique.
Only a fifth have a "fraud response plan."
The two most common ways to prevent fraud included clear and uniform accounting procedures, and frequent financial reviews or reconciliations, each used by four out of five companies surveyed. Other methods included having physical safeguard to secure company assets, segregating duties and authorization policies, pre-employment screening and mandatory job rotation. Larger firms were more likely to have prevention measures in place than smaller ones.
The most common detection methods included systems of monitoring and safeguarding assets, internal and external audits, systems to allow employees to report alleged violations, surprise controls and data mining.
For a fuller look at the report, click here.
Six trends for 2012
What will small businesses be up against next year? The Guardian Life Small Business Research Institute has identified six trends for 2012, with suggestions for actions to deal with them.
The trends are based on a survey of nearly 1,100 business owners that the institute conducted.
"The ongoing uncertainty of the economy, increased competition and the impression of negativity surrounding election-campaign rhetoric will greatly affect small businesses in 2012," said John Krubski, research advisor to the Institute in a release. "Anticipation of these issues, coupled with guidance on how to tackle them, will help small-business owners maintain and potentially grow their business in the new year."
The six trends, not surprisingly, include continued economic volatility, tight access to capital, marginal businesses pushed to the brink, more competition from larger companies poaching prospects they considered too small in the past; U.S. election-year campaign rhetoric creating negativity, and more trade-offs and deal making.
There were also suggestions of ways to cope with these issues.
EVENTS AND KEY DATES
Family business award nominees sought
The John Molson School of Business at Concordia University and Montreal-based accounting firm Fuller Landau LLP are searching for nominees for the 2012 Fuller Landau Family Business Award, which recognizes Quebec-based family-owned businesses whose policies and practices have a positive effective on the community and stimulate economic growth through local entrepreneurial ventures. There will be awards in three categories: small businesses with fewer than 25 full-time employees and under $1-million in annual revenues; medium-sized businesses with 25 to 100 full-time staff and $1-million to $5-million in revenue; and larger businesses with more than 100 full-time staff and more than $5-million in revenues. Nominations must be received by Jan. 31, 2012. Finalists will be asked to submit a full application form by March 15, and winners will be announced in May, 2012. For more information, click here .
Y business expo
The YMCA-YWCA Enterprise Centre will hold its annual Y Biz Expo featuring emerging business talents introducing Ottawa's newest products and services. It's an opportunity to hear speakers offer insights on self-employment and to see how entrepreneurs are bringing their passion to life. It takes place on Dec. 8 in Ottawa. For more details, click here.
Funds for entrepreneurial stars
Looking for some funding for your business or business idea? Entrepreneur Stars, a new leadership group for entrepreneurs and emerging-growth companies, has announced it will give away up to $100,000 to between one and 20 entrepreneurs (awarding a $5,000 prize to each winner) who present the best business idea. The offer is open to anyone with a great business concept or a company that seeks additional funding. Contestants must submit a three- to five-minute video and exeutive summary about their idea and how the money would help. Entry deadline is March 2, 2012, with winners to be announced on March 17, 2012. For more information, click here.
EDITOR'S PICKS FROM REPORT ON SMALL BUSINESS
Rising stars among Toronto's young entrepreneurs
In October, Report on Small Business invited dozens of enterprising entrepreneurs to attend a networking event. Through photos, videos and text, meet these up and comers with big ideas and grand ambitions.
FROM THE ROSB ARCHIVES
Your business has been hacked
Another workplace fraud fear: Your business has been hacked. What do you do? It's a problem that Ivor Tossell looked into back in October, 2010, as the second in a four-part series on Internet security: how to monitor and prevent threats to the computers and networks of a small business, and how to combat breaches when they occur. Check out part One here, part three here and part four here.
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