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Five Ways to Combat Fraud in the Workplace

Five Ways to Combat Fraud in the Workplace

Published by Programme B

In our ever changing world, criminals are constantly developing new strategies to siphon assets from unsuspecting workplace victims. The Toronto private investigators at Haywood Hunt & Associates Inc., investigate workplace frauds daily and have some tips to avoid falling victim. 

Let’s explore two fictitious employees, Dependable Doug and Angry Adam, to see who poses a higher risk to a business.The recent Employee of the Year is Dependable Doug. He is an employer’s dream! He is at work every day, takes on extra work without complaints and goes the extra mile to please vendors and clients. On the contrary, Angry Adam is continually causing strife at the water cooler with his negative banter. It is obvious that Adam is not enjoying his time with the company – he appears to be a virtual tornado waiting to explode! One might think that the company would want Dependable Doug’s colleagues to take a page from his playbook; however, not everything may be as it seems. Let’s delve a little closer to explore what is really happening for the employer to help them to combat potential workplace fraud. 

  • Dependable Doug – Always Present!

Dependable Doug must be the most dedicated employee on the planet – or is he? On closer inspection, perhaps he should use the moniker, “Dubious Doug” to fully reflect his true  intentions. While he is ever present at work, Doug’s lack of vacation time could be masking an ulterior motive. Doug knows that if he takes his allotted days off, a peer could be assigned to cover his duties. Normally, that would be welcomed by staff, but not so for Doug. He has been skimming funds from the weekly deposits; thus, he knows that if someone covers him, the house of cards may fall in and he could be caught siphoning capital from the company. Doug decides to forego the little yearly trips in order to siphon business funds for personal gain. He is certain it will be worth the effort when he is sipping an umbrella drink at his new, fully funded beach home in a few years.

Tip: Ensure all employees take vacation days, as earned. Not only will it make them more productive once well rested, it will also give someone else the chance to ensure that everything is right where it is supposed to be. Also, ensure that external audits are done regularly by a qualified professional, such as a Chartered Professional Account. For more information on how CPAs serve the public’s best interest, visit the Chartered Professional Accountants Canada website.

  • Dependable Doug Is Very Charismatic with Customers

At first glance, Doug is the life of the party and always a hit with the customers. Everyone loves him, especially Big Spender Tom, the firm’s best client. Doug has even sacrificed every Sunday to watch football with the customer. What a great team player! Or is he? 

Tip: Encourage professional relationships and boundaries between staff and clients. If a staff member gets too close to a vendor or client, it may lead to blurring or even crossing of professional lines. You want to be sure that there are no gray areas when it comes to potential conflicts of interest or, even worse,  illegal tied selling or exclusive dealing. Keep your business on the right track by developing a professional code of conduct that is signed yearly at the annual performance review. Several codes and regulations have been developed by the Government of Canada regarding specific industries that may be of interest.

  • Dependable Doug is Very Financially Disciplined

John’s favorite mantra is, “A penny saved is a penny earned.” When the team goes out for a hot lunch every Friday, John opts for his sandwich at the office. He is so disciplined – that MUST be how he saved enough money to buy the new Porsche! Or is it?

Tip: Be wary of staff who live beyond their means. If you notice new purchases outside of the realm of their salary, it may mean that money is being funneled out the back door and you need to kick the door shut! Take an interest in the lifestyle of the suddenly rich and famous, especially if the business finances are declining without an apparent cause.

  • Angry Adam is …Angry

Angry Adam is always venting to others at the water cooler about the workplace. A few months ago, I overheard him telling a co-worker that he was thinking of leaving. He’s been gradually getting worse and seems completely disengaged. His work product has even slowed down. 

Tip: A disgruntled employee may be the first person to seek revenge against a company. Business owners and managers must promote health and wellness for all employees. In turn, employees will be more inclined to take care of the business. If staff are vested in the success of the company, fraud will surely be mitigated. Visit the Center for Disease Control and Prevention’s website for resources available to promote health and wellness for employees.

  • Haphazard Policies and Procedures

When Dependable Doug started working for the company, he asked for the business’ financial policies and procedures. He was very pleased to learn that there were no guidelines, which meant that no one would be watching.

Tip: Written policies and procedures, including fraud mitigation strategies, are vital to every company. Staff should be provided with them upon employment commencement and be able to seek such resources easily. Ensure that the documents are updated regularly, to coincide with current risks. The documents should contain information regarding anonymous reporting processes, in the event that staff discover potential fraudulent activity. It is critical that any report remains confidential and protects the safety of the reporting personnel. The Government of Canada has developed a Fraud Risk Management Framework that could serve as a building block for any company when creating financial fraud policies.

Despite Dependable Doug appearing to be a stellar employee, his employer needs to be vigilant. Although Angry Adam is overt in his intentions, it is Dependable Doug’s covert behavior that could potentially be the most costly for the business. 

Photo by Nam Quân Nguyễn: