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5 Indications That Employee Fraud Is Occurring Within Your Organization

3 Mins read

Employee fraud may not be a major concern for organizations who keep CFOs, CROs and CAEs awake in the night, but would turn out to be a drain on the bottom line of the organization who has been having a number of negative impacts and there is nothing that could be done with it. In a research study conducted by the association of the certified fraud examiners and the report to the nations on occupational fraud and abuse issued in the year 2012, shows that the median loss of each instance of employee fraud in their study was something more than around $140,000. More than one fifth of these cases here caused losses of at least $2 million. Even in a large and multi-billion dollar company the amount is significant enough. Given below are the 5 Indications in which the employee fraud would generally turn out to occur.

5 Indications That Employee Fraud Is Occurring Within Your Organization

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1. Employees are generally spending more than their peers: Staff members who have an identical job descriptions or similar positions in your organization would be having similar expenses. Say for examples you have two employees John, Maxwell working at the same time in your organization. And if Maxwell expenses are about $2000 and johns $10000 in a month you should here then try and have a look at John expenses report for the same time. He could here be manipulating the amounts or making fictive claims. While having a look at the spending trends try and see if they could correlate with your ROI or not. Employees who have high expenses should be able to justify claim those links with high income generation.

2. Monitoring vacation balances: You might here be impressed by the employees who have not even missed a day of work in the years. And while those would seem to be like loyal employees, it would then be a sign that these employees have something to hide and are more worried about someone detecting their fraud if they were not out of office for a specific period of time. It is also again a good idea to rotate the employees of your organization to various jobs within a company. This would again reveal fraudulent activity as it allows the second employee to review the activities of the first.

3. Living the cooperate culture: Having a positive kind of an environment within the organization would always help in avoiding fraud and theft. The organization should be a clear planning structure, written policies and procedures in order to have fair employment practices for all the activities that they have been doing. An open door policy would also lead you with greater fraud prevention system, giving employees an open line of communication holding every employee accountable for all their activities regardless of their position.

4. Double billing: Do watch out for employees who have been doing double billing like charging expenses again and again under different trips or on different days. Also some of the employees would here be using company credit cards for a purchase and then later submit receipts if the same purchase was made for the second time. Expense management software solution would here allow you to set controls helping you identify duplicate transactions that are made by the employees of your organization and send you automated alerts regarding the transactions made. Your finance department would have the work cut out by not having the cross check paper statements in order to catch duplications.

5. Hiring Experts: Certified Fraud Examiners (CFE), The Certified Public Accountants and the last but not the least the CPA who have certified would help you and your business organization in establishing antifraud policies and procedures. These professionals could here provide a wide range of services starting from the entire process of internal control audits and forensic analysis to the process of general and basic consultations.

To conclude those who are willing to commit fraud would never ever discriminate. It is something that could happen in the larger or the small business organization across various industries and geographical locations. Occupational fraud could easily result in a huge financial loss, legal costs and the ruined reputations that could ultimately lead you to the downfall of an organization. Having the company’s policy known to the employees of your organization is one of the best ways to deter fraudulent behaviour.

Melissa Patterson is a freelancer and has experience of over 5 years in procurement management software. She has in-depth knowledge about managing travel and different type of expenses incurred in business. She writes about expenses management software solution as a freelancer.

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