As many employers grapple with putting measures in place to keep their employees’ jobs and incomes secure, the risk of employee fraud is highly likely to increase.
The following article looks at why this may happen, how businesses can act to protect themselves and how they should react if any instance of employee fraud is detected.
Tenet’s Liane Atcheson explains, in two short videos why the risk of insider fraud is increasing and how businesses can act to protect themselves if they identify it.
Employee fraud typically occurs when two factors are present – need and opportunity.
Financial distress – in one form or another – is an almost inevitable consequence for many households. This is likely to continue beyond the immediate weeks of lockdown and furlough as the economy idles into an expected slow recovery. In the current situation, employees may be facing a number of challenges, including:
As a result, ‘need’ can arise. In this financially vulnerable state, employees who have the opportunity to access to their employer’s cash and financial systems, are far more likely to give in to temptation. This is where need and opportunity come together.
Experience shows that the majority of employees who commit fraud against their employer are in some way directly connected to all, or part of, the financial processing of the business. Usually, they are trusted explicitly by their employer and, sadly, some of these employees will have held their roles without any abuse of position for years prior.
The fraud is likely to be simple; paying fake invoices to themselves, over claiming of expenses or taking ‘back handers’ from contractors and suppliers who may also be anxious to retain your business.
If you tackle the root causes of employee fraud, you have a greater chance of preventing it. This is likely to be a significant challenge for many employers, particularly during the current crisis, when so many factors which will influence need and opportunity are outside of their control.