Fighting Employee Fraud

Acts of fraud aren’t obvious to detect. It is in their very nature that they are concealed. Just as there is no blanket technique used by fraudsters to rip off their employers, there is no blanket technique that can be utilised by employers to detect such acts. Eight simple ways of fighting fraud will however be explored below.

From the beginning
Hire the right staff. Background checks are relatively easy to perform and are rather inexpensive. Ensure that the person that you are employing not only has the right qualifications, but they are also an ethical person. Dishonest employees could cost you more than just wages.

Implement fraud policy and procedure
Implementing fraud policies and procedures in your workplace are simple and cost effective ways to minimise the risk of employee fraud occurring. These policies and procedures should encompass the relevant laws and regulations and provide protection to your financial information and business assets. Such protection can be afforded through requiring accurate financial reporting and conducting regular audits.

Monitor your workplace
In addition to having written policies and procedures in place, you should further monitor the way in which your business is running by;

  • Conducting random audits
  • Checking that suppliers aren’t being paid before invoice due dates
  • Monitoring your staff relations with suppliers
  • Looking for unusual (e.g. whole dollar) or irregular payments being made.

Secure your accounts
Utilise the security services your bank offers to reduce the potential abuse of your online account. Ask for encryption, use digital certificates, require SMS verification for transactions and take advantage of independent audits offered.

Create authority
Provide employees with different levels of authority, ensuring that no staff member can initiate, authorise, record and review a transaction. A diversification of authority will allow employees at all levels to keep an eye on each other.

Limit access
Don’t just stop with creating authority; use the different levels of authority that you do create to limit the access to financial, accounting and asset information. This will ensure that such information is contained within the workplace to employees with the utmost authority.

Inform your staff
There’s no point having flawless fraud prevention policies and procedures in place if your employees aren’t aware of them. Make them aware. Speak about the material at team meetings, or place notices in the lunchroom. Whatever the method of delivery, the fraud policy should be well-publicised and staff should be asked to sign a statement that they have understood the policy in place.

Open communication channels and establish a confidential reporting system
You don’t want employees to feel as though they can’t communicate any suspicious behavior because of petty in-house conflict or the thought that reporting such activity could jeopordise their own position. Create an environment where employees across all levels feel comfortable talking and reporting matters to each other, and establish a system that allows for employees, customers and vendors to confidentially report instances where they believe a breach of the fraud policy has occurred.

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