The Wall Street Journal on Small Business Fraud

Wall Street Journal reporter, Sarah Needleman, discusses why small businesses are such high risk targets for fraud in this video from March 2010.

Can you cover the loss?

The odds of recovering fraud losses are very low. In most cases, when the money is gone, it’s gone forever. If a business suffers $25,000 in fraud losses, it takes $250,000 in new sales to offset the loss assuming you make 10 cents on the dollar. Unfortunately, experts claim the average fraud loss for small businesses is much higher than $25,000.

Ready to take a chance?

According to the Association of Certified Fraud Examiners 40% of all fraud is committed at companies with less than 100 employees. It often takes more than 18 months to discover that a fraud has even been committed.

Maybe it’s an honest mistake?

Experts say that accounting errors result from simple bookkeeping mistakes 60% of the time. Even when unintentional, mistakes can lead to overpaid taxes and missed opportunities.

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AuditMyBooks is a subscription software service that automatically analyzes small and medium business (SMB) accounting records to detect errors and possible fraud.  AuditMyBooks is designed to work with QuickBooks, the #1 small business financial software application in the U.S.  AuditMyBooks is available in the Intuit Workplace.

The Association of Certified Fraud Examiners (ACFE) estimates that fraud cost U.S. businesses nearly $1 trillion last year, and that 40% of the cases investigated occurred at SMB’s with less than 100 employees.  Businesses of this size suffer the highest median loss at nearly $190,000 per occurrence and 25% of the cases exceed $1 million in losses.  When fraud is committed, it takes an average of 18 months or more to discover.