Workplace fraud remains problematic

Employers of all sizes lose a projected 5 percent of annual revenues because of fraudulent activities, committed by 42 percent of employees, 38 percent of managers, and 18 percent of owners and executives, according to a study by the Association of Certified Examiners.

The study finds that most fraudulent activity happens within the 23 million small businesses, and these employers account for 54 percent of total U.S. sales and provide 55 percent of all jobs.

"That's a good deal of manpower and finance in the hands of companies with less than 500 employees," says Cynthia Hetherington, MLS, MSM, CFE, founder and president of the Hetherington Group. "Small businesses, in particular, are extremely susceptible to employee fraud as they often lack the anti-fraud controls or policies found in larger organizations."

The Hetherington Group suggests that businesses to act to minimize the effects of fraud, and this can be done by evaluating their employee screening processes and employing antifraud policies and controls. 

Small companies often do not conduct background checks on new employees, which could unknowingly bring in hackers, predators and convicted felons, The Hetherington Group cautions. Employers should run thorough background checks going back the past seven years on all employees. Once a release is signed, employers should also run credit checks to find any fiscal irresponsibility. 

The Hetherington Group also maintains that employers should monitor job candidates’ social media profiles to find any negative information, particularly previous animosity against former employers, and they should implement an employee policy dictating appropriate behavior when they are representing the company, which includes social networking.

Antifraud controls that can monitor all employee activity are internal and external audits, management reviews and independent audit committees, fraud training for management and employees, mandatory vacation and job rotation, and hotlines and rewards for whistleblowers, The Hetherington Group states.

"Fraud detection and prevention should be an ongoing initiative, and International Fraud Awareness Week offers a great opportunity for businesses to become aware and develop and review policies and controls to fight fraud and safeguard their livelihood from this continually growing problem," Hetherington says.

 

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