September 26, 2022

World Trades

Finance Blog

How to Protect Yourself from Occupational Fraud

3 min read

The very nightmare of employers: occupational fraud. This type of scam is when an employee, or group of employees, decides to steal or defraud the company. Occupational fraud is usually an open secret within employees as long as they understand that they agree to never let the management find it out. Such activities include inside trading, forging reports, as well as invoices. This crime mostly ends in irreversible damage to the finances and overall productivity, even worse, to company foreclosure. It is highly recommended to hire accountants in North London to solidify your protection.

Recognizing the Crimes

Detecting occupational fraud is a tricky task. Unlike any other fraud activities, employees from different positions can group to conceal the crime. These types of illegal activities are typically uncovered through tips given by other employees. Tips lead to investigations that end in the entrapment of everyone involved.

Here are few noticeable signs when occupational fraud cycles in your company:

  • Fake Invoices: Employees can generate payment to a non-existent vendor/client by creating a fraudulent invoice. They address the check to the made-up address where, later on, they cash out themselves.

  • Fake Checks: If an employee spends a lot of time assisting an executive, it’s easier to memorize and copy signatures and forge checks.

  • Losing Properties: Pieces of equipment like laptops and calculators goes missing. Usually taken home or sold by employees.

  • Inside Rat: Certain employees can generate income by selling important information about your company to its close competitors.

  • Lavish Lifestyle: Obviously, something is off when an employee is living a life beyond their salary. The possibility that the employee is engaged in something of no good nature is highly likely.

Preventing Inside Jobs

Here is a guide to help save you from the headache:

  1. Do not skip screenings before hiring employees. A resume is simply not enough as a reference to a person’s character. Aside from position related exams, it is a great security step to also conduct personality tests or background checks

  1. Emphasize the consequences of fraud or theft. Having employees on board doesn’t necessarily mean they’re fully aware of the company’s policies. It would make a mark if there are certain spots in the company facility reminding them of the consequences of occupational fraud. This boosts their awareness of committing crimes.

  1. Offer a particular tip email address or phone line. This will give employees more confidence in reporting illegal happenings within the workplace. Some are afraid of complications reporting might bring, but being anonymous, reports can easily fall on your desk.

  1. Conduct surprise audits. Collaborate with certified public accountants in north London and focus on your financial statements to check, and recheck, that no fraudulent activities are running under the radar causing losses.

  1. Don’t be too confident. Any employee can jump into any monetary gain through fraud if the opportunity allows.

Efficient Employee Management

Nothing beats leading by example. If your employees can’t question the management, as well as the performance ethics of those at the top, they will surely operate accordingly. Offer a rewards system to motivate their productivity and vocalize the important role they play in keeping the company going.