From the articles

Business Management: All Fraud Starts with You (the Owner)

It may seem harsh but it has been stated that, when it comes to small business, all fraud starts with the owner.

It happens if you have been too trustful or too distracted either chasing more business or enjoying success. Compared to large businesses, you have fewer staff to check the effectiveness of procedures and systems in your business and usually there are no financial advisors to do internal control checks for you.

Sadly, while owners of businesses have the passion and solid knowledge of their business, they have not built a solid wall of internal controls to safeguard their business. Your passion, ideas, market, copyright and brand must be protected by an effective system of control.

A small business has limited resources, and the owner you, must be active and vigilant to protect those resources. Good internal controls help you manage resources and make sure operations are efficient and effective. You cannot run your business alone! You must build a business that can function without you if you want to expand and grow. The only way is to build a control into your business.

If you invest in setting up a solid internal control for your whole business, it will:

  1. Help align and fulfill the objectives of the business
  2. Safeguard assets
  3. Prevent and detect fraud and error
  4. Encourage good management
  5. Allow action to be taken against undesirable performance
  6. Reduce exposure to risks
  7. Ensuring proper financial reporting

Good internal control will assist in achieving the businesses objective. Without accurate financial information, decision-making becomes impossible and the business will suffer. Internal control ensure financial information is accurate so that owners can take the correct action to meet business objective.

If you think you have solid systems and controls, no system is perfect! A business owner has to be aware of potential breakdown at all times and be prepared to review all systems.

No or lack of solid internal control leads to fraud, bad decisions and not allocating the resources of the business correctly or most efficiently.

Hence, as a small business owner, look critically at your business and examine whether your procedures adequately minimizes risk and promote best practice. Don’t wait for a one-week audit at the end of the year to review your books, one-week cannot effectively look at what you have done for the entire year. Get solid financial guidance to build a shield around your business and enjoy the bliss of seeing your business fulfil the purpose it was set-up.