{"id":998,"date":"2021-07-15T06:18:50","date_gmt":"2021-07-15T06:18:50","guid":{"rendered":"https:\/\/crigroup.com\/?p=998"},"modified":"2024-01-23T14:49:57","modified_gmt":"2024-01-23T14:49:57","slug":"identify-and-prevent-employee-fraud","status":"publish","type":"post","link":"https:\/\/crigroup.com\/ar\/identify-and-prevent-employee-fraud\/","title":{"rendered":"How to Identify and Prevent Employee Fraud?"},"content":{"rendered":"

In 2017 the major European ABB conglomerate admitted that an\u00a0<\/span>employee took advantage of serious management failings to disappear with $103 million of the firm’s cash<\/span><\/a>. According to CNN business, ABB CEO Ulrich Spiesshofer and Chief Financial Officer Eric Elzvik admitted that the organizations managers had failed to maintain sufficient segregation of duties in the treasury unit of its subsidiary in South Korea and did not provide enough oversight of local treasury activities.<\/span><\/p>\n

To top it all off, ABB also failed to keep the signature seals of the South Korean unit secure which as a result, has lead the company became “bound to unauthorized financial contracts, resulting in undetected financial obligations.”\u00a0<\/span><\/p>\n

Organizations rely on the honesty and integrity of their employees, however employee fraud does unfortunately cost companies vast sums of money. Employee fraud is a reality across all sectors – no matter how credible a job applicant is and how stringent your hiring process is – your business is at risk.<\/span><\/p>\n

Tips on Identifying and Preventing Employee Fraud<\/span><\/h2>\n

When you trust your employees, it is difficult to think the worst of them, even when there are red flags \u2013 circumstances or patterns that are out of the ordinary \u2013 alerting you to the contrary. If you have suspicions of employee fraud, it is recommended to hire a forensic accountant to help you detect fraud, understand your circumstances, and put together evidence to target and confront the employee without tipping them off.<\/span><\/p>\n

The good news is that you can plan and train your team to prevent this from taking place; the best thing you can do for your business is to learn how to recognise the warning signs of employee fraud and have robust procedures in place to minimise the risks and opportunities for fraud. Employee fraud covers a wide range of fraudulent activities in the workplace and can vary in seriousness including embezzlement.<\/span><\/p>\n

Embezzlement involves an employee who transfers company funds into their bank account. One example of an act of embezzlement is deliberately writing cheques in the employees’ name or diverting company assets without authorisation, e.g. customers unknowingly pay into an employee-controlled bank account, not the business’. This is serious fraudulent behaviour, but employees usually get away with it without raising any suspicion by creating non-existent suppliers and fake employees or using counterfeit credit notes to hide\/disguise misappropriated monies.<\/span><\/p>\n

An easy way to spot this type of financial fraud is to scour through the bank statements and financial records of your organisation and check for irregular activities or patterns of unusual and unauthorised transactions. <\/span><\/p>\n

Another common sign of embezzlement is when either an employee or a manager\/director begins to enjoy a lavish lifestyle that is obviously beyond their means, e.g. holidays, cars, clothes\/jewellery. <\/span>In the case that<\/span>\u00a0you suspect an employee or director might be embezzling funds from within your company, it is essential to be discreet in your employee fraud investigation to prevent the employee from covering their tracks and disposing of substantial evidence.<\/span><\/p>\n

Other Common Types of Employee Fraud<\/span><\/h3>\n