I met with a small business owner over lunch yesterday and the conversation turned to the uncertainty in today's markets and the effect on decision making. 

The conversation turned to the reaction of business owners to fraud in their organizations as an example of how many people act against their own interests.

  According to the Association of Certified Fraud Examiners' most recent survey:

• 70% of all companies have experienced fraud in the last three years
•  Small business, those with less than 100 employees, suffer the highest median loss in dollars, not just in relative terms
• The average length of a fraud is a little over 24 months.
• The most implemented reaction is for management to review internal controls.  Out of 15 actions to take, this was done 56% of the time, more than twice as often as the second most implemented action.
• Management review of internal controls is the second least effective means of controlling occupational fraud.

Why do people most often pick one of the least effective ways to address this problem?  It was not asked in the survey but we speculated that this was the easiest and least costly action to implement. 

At this point, my companion said, "I lived this two years ago!  What you described happened to me."  This is a small company that does not deal in cash.  This comment hit home to me that this survey has some credibility and fraud is happening to people who never suspect that it is going on.

If you would like an outside review of fraud risk, a B2B CFO can provide immediate help.