FRAUDSTERS IN YOUR WORKFORCE

Business Frauds

According to a research conducted by the

Association of Certified Fraud Examiners, Inc. on occupational frauds and abuse in 2014

“Employee frauds result in 5% loss in revenue each year”

Common Types of Fraudsters in Business

1. FAKE USERS

User growth is an important step for financial growth but fake users also account for fraudulent abuses like identity theft, spam and account takeover.

“A research shows that fake users create problems in 82% of the companies”

2. CONCEALERS

Altering physical documents and transactions in order to commit frauds is what the concealers do.

They try that their fraud is not disclosed by making changes to the originals.

3. PAYMENT FRAUDSTERS

Frauds that create or divert payments account under this category.

The Association of Financial Professionals states that

“75% of American businesses were targeted for payment frauds in the previous year”

4. POTENTIAL JOINEES

Individuals apply for work positions with organizations possessing weak fraud controls and commit frauds.

4. TOP LEVEL EMPLOYEES

Employees at the top most level of organizations have an access to the assets and credentials. They may thus, be able to override the controls and misuse their position and authority.

FRAUD PREVENTION

Some measures that can be taken in order to prevent frauds at workplace

It is vital that all organizations whether big or small shall make a plan for fraud prevention. Imagine what losses would the company suffer from the activities of a trusted employee. We don’t even come to know about it unless audits and inspections are done. But we have solutions to every problem. There are ways to prevent this.

1. KNOW YOUR EMPLOYEES

Fraudsters may indicate behavioral traits intended to commit fraud. Observing the employees can help to identify this.

Management shall involve with the employees in order to sense the fraud risk. There might be a situation when such intentions arise later. In such cases, attitude changes may occur in the individual.

Thus, it is imperative to get familiar with your employees and keep them engaged in chats.

2. CREATE AWARENESS

Employees shall be made aware of the fraud risk policies and the consequences associated with them.

Honest employees who are not targeting these activities shall remain same after knowing the consequences and others who wish to do so shall be alerted that the management is keeping an eye on them and would back out from such activities.

3. SET UP A REPORTING SYSTEM

Employees work closely with each other. They might know the fraudster but hesitate to disclose about them because of their relations or fear.

A reporting system would ensure that the person committing business fraud is caught without revealing the identity of the one who reported.

4. IMPLEMENT INTERNAL CONTROLS

Internal controls are plans made to safeguard the company assets, keep track over the accounting records and detect and deter business frauds.

Documentation is one important element of internal control i.e. maintaining proper record of invoices and orders.

These control programs shall be monitored on a regular basis and revised in accordance to the needs of the system.

5. JOB ROTATION

Shifting the employees to different work areas and positions may reveal their frauds committed, if any.

The other employee in replacement reviews the former’s activities. This way the employees themselves would keep an eye on each other, making the management less burdened with this.

6. HIRE EXPERTS

Professionals like Certified Fraud Examiners (CFE), Certified Public accountants (CPA) and Certified in Financial Forensics (CFF) provide various services ranging from establishing anti fraud policies to internal control audits to forensic analysis of consultations.

7. SURPRISE CHECKS

Surprise checks would not give a chance to employees to hide their business frauds. This would also ensure that the next time employee hesitates in doing such acts.

8. WORK ENVIRONMENT

A positive work environment may prevent employees to commit frauds and thefts. The organizational structure shall be very clear, fair employment practices and written policies and procedures shall form a part. The employees shall be facilitated with open lines of communication with the management. Every employee shall be held accountable for their actions regardless of the position.

Employees may carry various reasons to commit business frauds. It may also include dissatisfaction from the work culture.

Clean desk policy and shredding services shall be adapted by organizations to remove all the opportunities of fraudsters committing business frauds.

Secure destruction of data is one important thing for prevention of business frauds and thefts.