What are the reasons behind one company’s collapse? There are many causes which lead to one’s bankruptcy, however, financial fraud (or financial statement fraud) is one of the major roots that gnaw a company bits by bits. The company does not break down immediately but crashes days by days.

Frauds are not just “popular” in big firms and corporations. They are still prevalent even in small companies. Growing up in a family that owns a small business, I gradually get the idea why frauds can be present anywhere and committed by just about anyone. Assigning management job to a close friend of the family or even a relative does not mean people’s greed is easily defeated. The closer those people are to you, the more opportunities they get to embezzle funds. The more trust you place in them, the better chances they get to trick you and destroy all your hard work.

Small businesses are more likely to be vulnerable to frauds. They usually lack the resources to enforce a complete system under thorough control with a limited number of employees. They are often developed around the concept where employees are entrusted. Therefore, small business owners and managers need to be even more careful in hiring employees and assigning jobs.