Increasing Rate of Employee Fraud in the Workplace

Nick Fishman

 

 

 

 

 

In case you’re not in the know, next week (November 11th-17th) is International Fraud Awareness Week 2012. The Association of Certified Fraud Examiners sponsors this awareness week and encourages companies to become more educated in the hazards of fraud in the workplace. Both small and large companies are at a greater risk of employee fraud, claims The Hetherington Group, a consulting, publishing, and training firm focusing on intelligence, security, and investigations. Statistically speaking, “fraudulent activity occurs within the 23 million small businesses in the United States that account for 54% of all U.S. sales and provide 55% of all jobs.” Whether you’re a small, medium, or large company, you can’t afford this kind of loss.

Cynthia Hetherington, founder of Hetherington Group, offers a few tips to prevent fraud from happening in the first place. A few precautions to consider:

•Internal and external audits

•Management reviews and independent audit committees

•Fraud training for management and employees

•Mandatory vacation and job rotation

•Hotline/tip line and rewards for whistleblowers

You might wonder where that leaves you when it comes to background checks. Based on these statistics, the best solution is you should be even more vigilant as an employer when screening potential employees, as well as current employees. In particular, you should consider screening new employees a priority, as pre-employment screening could prevent you from hiring a potential threat to your company. If you conduct a search for the criminal history of a candidate, you can be more confident that they will not be the cause of future fraudulent activity within your company. While it may depend on the position the applicant is under consideration for, important searches include criminal records and credit reports, which will reveal any illegal behavior in their past.

A survey conducted by the Retail Council of Canada discovered that theft by employees within the retail industry has reached a rate of 33% in 2011, a huge leap from 19% in 2008. With such a significant increase, employers can’t ignore that internal criminal activity is becoming a more serious issue than before. HR Reporter states that 3 out of 5 retailers perform pre-employment screening. However, of these employers, only 29% conduct a police background check, which is half the percentage of employers who did them in 2008. Although the focus of these two articles is retail fraud, they also bring to light the fact that employee criminal activity has increased and this issue is something that all industries need to guard themselves against. While not every fraud is preventable, performing pre-employment screening on all employees, especially those with access to company finances, will more than likely give you the kind of employees you want to stick around for the long run.

You can also check out these resources from i-Sight, “Working Backwards to Root Out Workplace Fraud” and “12 Most Effective Strategies for Preventing Workplace Fraud” with advice on how to look for and prevent fraud in your company.

Have a great weekend!

 

Nick Fishman
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Nick Fishman

Nick Fishman is the co-founder of EmployeeScreenIQ, a leading, global employment background screening provider, and serves as the company’s executive vice president and chief marketing officer. He pioneered the creation of EmployeeScreen University, the #1 educational resource on employment background checks for human resources, security and risk management professionals. A recognized industry expert, Nick is a frequent author, presenter and contributor to the news media. Nick is also a licensed private investigator in the states of Ohio and Texas.
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