| er of the fraud cases included in the Association | | | | Hiring Decisions |
| of Certified Fraud Examiners 2008 Report to the | | | | Some additional actions that you can take during |
| Nation on Occupational Fraud and Abuse reported | | | | the hiring process- beyond references, criminal |
| losses of over $1 million- the median loss incurred | | | | and other background checks, would be to look |
| by companies in the study was $175 000. Anyone | | | | into the validity of the information presented to |
| is capable of committing fraud, however, | | | | you by all applicants. The ACFE article "Developing |
| according to the Association of Certified Fraud | | | | a Strategy to Fight Fraud" by Andrew Durant |
| Examiners, fraud is much more likely to occur by | | | | states that in addition to a criminal background |
| those in accounting and upper management | | | | check, employers should also conduct the |
| positions. In many cases, fraud activities are | | | | following inquiries: |
| conducted by first time offenders. This makes | | | | - Confirm name and address of applicants |
| the hiring process more challenging, as you cannot | | | | - Confirm educational qualifications |
| make any assumptions of future behavior based | | | | - Check membership of professional bodies |
| on examples from the employee's past actions. | | | | - Confirm employment history |
| With this in mind, many of the precautionary | | | | - Check financial status |
| steps taken during the hiring process- reference | | | | - Confirm directorships held and any |
| checks, background checks and interviews, are | | | | disqualifications |
| only the start of an ongoing process in the fight | | | | - Media and Internet search |
| against workplace fraud. | | | | Observing Employee Behaviour |
| Characteristics of Fraud | | | | One of the easiest ways to determine if |
| A study by the ACFE states that only 7% of | | | | something strange is happening is to look for |
| those caught committing workplace fraud had | | | | changes in employee behaviour. Hubert Klein, a |
| prior convictions and just 12% had been | | | | partner in the litigation and valuation group at |
| terminated previously by an employer for | | | | Amper, Politziner & Mattia states that "in addition |
| fraudulent conduct. There are many | | | | to behavioral changesuse of drugs or alcohol, |
| misconceptions about the more common types | | | | gambling, or a sudden change in lifestyle (either |
| of fraud that take place at work. With the | | | | living beyond one’s needs or economic |
| headlines filled with reports involving major ponzi | | | | distress)there are other signs an employee |
| schemes and million dollar bribery scandals, many | | | | might be committing fraud." Here are some of the |
| people forget how much companies lose due to | | | | warning signs, recommended by Klein, in the |
| the presence of small scale fraud in the | | | | SHRM article "Fraud by Employees Is Common, |
| workplace. However, there is no set list of | | | | Difficult to Detect", that one should pay attention |
| characteristics that one can possess that signal | | | | to: |
| whether or not they will end up committing fraud- | | | | - They often operate in crisis or fire |
| just as not act of fraud will ever be exactly the | | | | drill mode, like the accounts receivable clerk |
| same. One of the misconceptions regarding fraud | | | | who always seems to come up with excuses |
| is that it always involves big schemes and should | | | | about why a large payment due was misapplied |
| be easy to detect. | | | | to a different customer account, Klein said. |
| Preston Ricardo, a partner at Golenbock Eiseman | | | | - They never take days off for fear that their |
| Assor Bell & Peskoe in New York states that: | | | | fraud could be discovered, or they might resign |
| They (the fraud activities) typically start small | | | | unexpectedly or abruptly when they believe that |
| and grow in scale and complexity as time passes | | | | they can no longer conceal the fraud. The |
| and the thefts go undetected. In addition, studies | | | | worst employee is one who is there 365 days a |
| have shown that almost half of fraud cases are | | | | year, because it takes a lot of mental energy to |
| committed by two or more people working | | | | perpetrate and conceal the fraud, Klein said. |
| together, either internally or with someone outside | | | | - They have pressure to meet certain financial |
| the company. Fraud is most prevalent in | | | | targets on the job or in their personal lives. |
| companies with fewer than 100 employees. | | | | |