Desperate times call for desperate measures, the sayinggoes.

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So it's not surprising that fraud in the workplace increased duringthe economic crisis and recession. The median loss tied tooccupational fraud is $160,000, according to the Association ofCertified Fraud Examiners' 2010 report, so the issue is somethingabout which many companies are rightfully concerned. Smallbusinesses are especially vulnerable, the ACFE says.

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Fraud typically occurs when someone has an incentive, such asfinancial pressure, and opportunity, according to Michele Edwards,who heads the fraud prevention and detection practice of PRGX, a Chicago-based audit, analyticsand advisory services firm. The recession certainly meant manypeople faced new financial pressures.

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Previous studies have shown that it typically takes two yearsfrom the time fraud begins to the time someone identifies it mightbe going on, Edwards said. As a result, while some companies havealready discovered fraud born of the recession, many more arelikely to uncover problems in upcoming years. “I think there's morefraud going on than anyone knows about,” she said.

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Periods of sudden growth, such as when demand for a company'sgoods or services starts picking up quickly, can also open the doorto fraud. Workers may be scrambling to keep up with more work,giving them less time to monitor employees, expenses andinventory.

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Edwards said new markets or new partners tied to growth effortscan also potentially expose businesses to corrupt thirdparties.

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Fraud can pad your selling, general and administrative expensesor inflate your cost of sales. Here are five ways to fight fraud inyour business:

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1. Confirm who's doing fraud control. “Do aquick and dirty assessment of fraud control,” Edwards says. “One ofthe questions I always ask [clients] is, 'What are yourresponsibilities for fraud and misconduct management?' If nobodyhas responsibility across a senior level, they have to establishsome kind of roles and responsibilities.” It can be a workinggroup, but someone needs to quickly identify areas that may needaction.

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2. Screen and monitor those who touch or trackmoney. Background checks are a must for accountingworkers, and division of labor is also a good idea, especially forthings like who gets the mail and who deposits checks. You neverwant one person to have sole access or control over the financialsystem. It's also important to make sure each worker takesvacations. Employees who are involved in fraud will be hesitant totake time off, because they won't want others looking over theirwork, and potentially noticing irregularities, in theirabsence.

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3. Conduct basic fraud-awareness training. Itcan be as simple as getting employees together and explaining thatfraud can occur in any organization and describing what they needto know and how they can speak up if they see something unusual.“It's Awareness 101, and it lets employees know that you'rewatching,” Edwards says. “It serves as a detection element in andof itself.”

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4. Periodically remind employees to bevigilant. Edwards says how you do that depends on yourcompany's culture. But it could be as simple as emailing the staffa news article about a recent case of occupational fraud. You couldsay something like, “This recently happened to a competitor. It's agreat time to remind everyone here that you are responsible forpreventing and detecting fraud.”

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5. Watch non-core vendors. PRGX recently foundthat one client who had gone through a hiring phase ended up payinghundreds of thousands of dollars to a completely fictitious vendorwith a P.O. Box address in India. Also be aware that new employeesmight not be as knowledgeable about what fraud looks like, so ifthey get an invoice, they will pay it without as much scrutiny as amore experienced employee.

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Mary EllenBiery is a research specialist atSageworksInc. in Raleigh, N.C.

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