Combating fraud in the workplace

However, while the number of cases perpetrated by professional criminals may have fallen, KPMG warns organisations not to be complacent but to be aware of the enemy within. Fraud perpetrated by either management or employees accounted for 80 per cent of the financial loss through fraud experienced by UK businesses in 2012.

As KPMG’s Fraud Barometer only considers major fraud cases heard in the UK’s crown courts, these figures are just the tip of the iceberg. A recent survey by PricewaterhouseCoopers found that 48 per cent of companies reported being the victims of fraud.

According to the Chartered Management Institute, eradicating all fraud in the workplace is not practicable as the additional internal controls required would stifle an organisation‘s ability to function. The cost would be prohibitively expensive, outweighing the benefits gained by the reduction of potential fraud losses.

While it may be impossible to stamp out completely, there are a number of steps a company can take to guard against fraud in the workplace.

Firstly, when employing a member of staff, don’t assume that the level of their role should determine the amount of background research undertaken. The proliferation of technology means that employees at all levels often have access to valuable and confidential information. Undertake background checks on all candidates. As research suggests that one in five lie on their CV, it’s important that companies scrutinize the information they receive, confirming academic qualifications and the existence of previous employers, and following up references.

Unfortunately a recent poll by recruitment website revealed that a staggering 92 per cent of people surveyed admitted to lying in previous job interviews. With such high results, it makes sense for companies to be as thorough as they can before hiring a new member of staff.

It is possible to measure a person’s honesty by using a pre-assessment tool before they even reach interview stage. By using a system like IntegriTool to screen candidates for their honesty and integrity, companies can immediately reduce the chances of hiring a dishonest person. After all even Criminal Records Bureau (CRB) checks, now known as Disclosure and Barring Service (DBS) checks, can only tell an employer if a candidate has been convicted for a criminal act.

By undertaking background checks and an IntegriTool pre-assessment survey, companies may uncover personal factors such as a gambling or drug habit, or financial problems. These issues may, in time, provide the motivation to commit fraud.

It is important that companies remain aware of the potential for fraud by existing members of staff, and consider screening them before they are promoted through the ranks to roles which carry greater trust and responsibility.

Secondly, an organisation must not be complacent about petty acts of fraud as this sends the wrong message to its employees. By turning a blind eye to what is often seen as low level deception, such as exaggerated mileage claims, some individuals may feel able to rationalise increasingly dishonest and costly behaviour.

By having a fraud policy document which explains the company’s definition of what constitutes fraud and the consequences for those who commits acts of fraud, there is no room for misunderstanding or rationalisation.

This document then becomes part of a company’s induction process and should be revisited with staff on a regular basis. Explaining the personal and reputational consequences for the individual, their colleagues and the company will help to establish an anti fraud culture, again making it harder for fraudsters to rationalise their actions.

Thirdly, rigorous systems need to be in position to reduce the opportunities for fraud to take place. These systems will very much depend on the size and type of organisation. For example, the use of GPS real time vehicle tracking not only enables fleet managers to manage running costs and improve productivity by monitoring vehicle activity and usage, it also enables them to ensure the accuracy of timesheets and fuel card expenses.

Indeed, anecdotally, the use of real time vehicle tracking tends to bring about more honest behaviour in the employees who use them; from keeping to the speed limit to lower mileage costs and reporting back to work on job completion rather than ‘knocking off’ for the day.

Having the systems and procedures in place is all well and good but they need to be monitored. For example, there’s no point having the procedure in place to ensure cheques are signed by two people within an organisation, if one simply signs whatever is put in front of them without checking.

Workplace fraud is often seen by those who perpetrate it as a victimless crime, but that is patently not the case. Stealing from the petty cash may result in a lack of trust towards all employees, leading to poor morale, while exaggerated expenses may mean budget cuts in other areas. At its most serious, fraud can result in irreparable damage to a company’s reputation, liquidation, the loss of jobs, and unpaid debts to suppliers.

With the many challenges faced by today’s businesses, by screening job candidates and employees for their integrity, regularly communicating the company’s fraud policy, and having the systems, checks and balances in place to prevent dishonest behaviour, they can at least guard against the enemy within.