Following our focus on "How to avoid the cost of employee fraud" last year, Stuart Evans of Rawlison Butler LLP examines the useful feedback we have had on readers' own experiences.
The message we have been getting from people's experiences
of fraud is that one of a company's own employees has often
been involved to some degree. Whilst that may be right in many
instances, it is not uncommon for third parties (not necessarily
suppliers) to indulge in fraudulent activity without the assistance
of employees on the inside; identity theft and computer hacking
would be examples of this.
It is clear then that in addition to the importance of proper
recruitment procedures in wheedling out the fraudster at the first
opportunity, there do also need to be effective controls in place
to prevent fraud once an employee has been appointed. The
experience of one reader is that a typical fraudster can often be
on their best behaviour to start with, in order to engender trust
in an organisation. Indeed, statistics suggest that such fraudsters
have usually been in a post for about 7 years before committing a
fraud, which may come as a surprise to many.
It is therefore vital to ensure that the business is properly
controlled, particularly to deal with operations once they have
become the preserve of a trusted, long serving employee. Contrary
to what many might think, fraudsters are often patient and ready to
act only once the coast looks to be clear, so be warned; the phrase
"I've known them for years and never thought they would be
capable of this" should always be at the back of an
employer's mind.
There is much to be said for reviewing your systems as a fraud
prevention exercise, with outside help, rather than waiting to call
for such help once disaster has struck. The costs of such a review
will be money well spent if it stops a large hole appearing in your
balance sheet.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
