Prevention training key to minimising fraud
ADDRESSING employee fraud is critical to the survival of any business. Many businesses are losing thousands to millions of dollars daily through internal related frauds.
The local media is full of stories involving employees stealing from their employers. Financial institutions are major victims to internal fraud or employee fraud, and the losses are normal huge. Some common frauds committed are Asset misappropriation, financial statements falsification and transfer of funds to fictitious accounts amongst others. Employees turn to such unconventional methods due to the existence or presence of an opportunity which they exploit to their advantage as they perceive a low chance of detection.
If Corporate Businesses are going to successfully curb employee fraud or workplace fraud, managers must receive adequate training or orientation in the matters of fraud.
The following are some of the methods that Management trained in fraud prevention can use to combat fraud at a workplace: ◆ Tone at the top. Managers have the responsibility of detecting and preventing fraud at workplaces as well as exhibiting the kind of behaviour that can be emulated by their subordinates. If they become unethical other employees will follow suite and steal like them. ◆ Sound internal controls. The Organisation’s internal controls should thoroughly deal with issues of approval and authorisation process, access restrictions, transaction controls and account reconciliations amongst others. The procedures should be clear on division of responsibilities and checks and balances to reduce fraud.
◆ Aggressive audits. Mangers should put in place an aggressive audit process which concentrates on high fraud risk areas such Accounting process and procurement etc.
◆ Legal enforcement. Criminal activities by employees should be seriously addressed. If management creates a weak legal enforcement system, then employees will be motivated to steal. For example, situations where offending employees are only dismissed from employment and criminal charges are not preferred against them in fear that the Company may have bad publicity are motivational factors. If the sanctions are deterrent enough, prevention
of employee fraud is the direct benefit. ◆ Employee support programs. This relates to programs that cushion employees from some pressures or stress. Management should make provision of counselling services so that employees have a platform to speakout their problems. Some employees end up stealing if they carry an unresolved problem for a long time. ◆ Fraud training for managers. Managers should ensure that they get training in fraud detection and prevention so that they appreciate the extent of fraud in workplaces. Once managers are fully oriented in matters of fraud, they come up with sound controls and anti-fraud strategies to curb crime.
◆ Fraud training for employees. Not all employees are dishonest. Some workers even though they see a crime committed in their presence may decide to remain silent because they do not know what crime has been committed. If workers are trained or oriented either through periodic lectures and workshops and are made aware what constitutes fraud, how to detect fraud and how to report fraud, fraudulent acts will be exposed by other employees that hate committing crime.
◆ Watch out for red flags of fraud. Managers should be wary of their staff which exhibit serious discrepancies between their earnings and life style. When an employee’s life style suddenly becomes flashy, lavish and highly inconsistent with his or her income, then there is good reason to suspect some under dealings.
◆ Learn from the past incidents. Most Businesses are repeat victims of fraud as a result of failure or lack of willingness to take lessons from past incidences of fraud. In order to effectively fight and prevent fraud at a workplace a critical examination should be made to determine the circumstances and conditions which allowed the fraud to occur in the past. Once causes are identified, the systems and procedures should be improved so that similar frauds do not occur again. ◆ Continuous Research. Managers cannot adequately deal with fraud if they are not up to date with current trends of fraud in business. There is need for continued research to determine and establish how business can be victimised by internal fraudsters in each particular business environment.
Get empowered by Fraud Insight and be part of a solution to fraud scams. Watch out for the next issue on Identity theft that will look at and provide various possible measures that one can take to protect self from Identity theft scams.
For your feedback, WhatsApp line: 0772 764 043, or e- mail: teezmuleya@gmail.com. Tom Muleya is a Detective Assistant Inspector working under the Criminal Investigations Department in Harare.