How to Detect and Prevent Employee Fraud
Employee or occupational fraud involves using one’s job to lie, deceive, and misuse company assets for personal benefit. This comes in many forms, including asset misappropriation, financial statement fraud, data theft, and corruption.
These incidents could have devastating outcomes for a business, as they could lose revenue and tarnish their reputation. So, learning about detecting and preventing employee fraud is essential. Here’s what you need to know:
Signs of Employee Fraud
It can be difficult to detect occupational fraud, especially if you have hundreds of staff. Still, there are subtle warning signs that could help you identify potential cases:
- Unusually close association with vendors or clients
- Unwillingness to share duties with coworkers
- Reluctance to take breaks or vacation leaves
- Inventory shortages or increases in supply
- Discrepancies in financial documentation
Tips to Prevent Employee Fraud
Apart from looking out for warning signs, having solid measures in place to prevent occupational fraud is critical. Some things you can do are:
- Implement Anti-Fraud Policies: All employees should be aware of the consequences of occupational fraud and the importance of preventing it. Establish written policies that indicate what fraud is, its repercussions, and how to report potential incidents. A whistleblower policy can also encourage employees to report suspicious behavior.
- Strengthen Internal Controls: Strong and up-to-date internal controls can help minimize the chances of fraud. Consider segregating duties, establishing clear and hierarchical approval processes, and restricting access to certain documentation or information for key financial operations.
- Perform Regular or Surprise Audits: Regular audits are beneficial to ensure policies and processes are being implemented. Besides identifying suspicious transactions or weaknesses in operational procedures, unannounced audits are also effective in catching potential fraudsters off guard.
- Provide Employee Training: Even with established policies, your staff can benefit from fraud awareness and prevention training. These can reinforce the importance of the company’s ethical standards and employees’ responsibility to avoid illicit activities.
- Conduct Thorough Background Checks: Another way to mitigate occupational fraud is to ensure that the employees you’ll hire are trustworthy. Background checks should cover whether a candidate has had previous criminal records or cases of fraudulent or suspicious behavior in their former workplace.
Learning how to detect and prevent employee fraud can help reduce the likelihood of it occurring in your company. If you need help with training programs and finding the ideal candidates for your organization, consult a trusted staffing agency. Contact GLO Resources for reliable placement and recruitment services today!