Employee Fraud- It Can Happen Anywhere

Employee Fraud- It Can Happen Anywhere

December 7, 2015

Today I have been talking to an employer about a case of employee fraud. This time the employee has been claiming for commission on sales they didn’t make, and the employer’s systems were not in place to spot the claim before many thousands of pounds had been paid out incorrectly. It’s a timely reminder that we shouldn’t be naïve and think that Employee Fraud doesn’t and couldn’t happen in our organisations.  

Means, Motive & Opportunity 

Sadly employees need only three things to commit fraud in your organisation.

  • Means
  • Motive
  • & Opportunity

  The following are fraudulent acts for example:

  • Arriving late and/or Leaving early without the bosses knowledge
  • Taking time off during the week and therefore not working when you are supposed to be.
  • Carrying out own work using your time, resources and materials.
  • Expense claims for personal items such as perfume, or meals out.
  • Claiming for private mileage or exaggerating mileage claims
  • Placing ‘Ghost’ Employees on the payroll and keeping the money
  • Syphoning fuel from your works vehicle in a layby and selling it to friends
  • Stealing money from the Company Debit Card – a Pre School that lost a considerable amount through this fraud. 
  • Styling hair of friends at a ‘friends’ rate
  • Saying they are at college when not.
  • Pretending to be a victim of theft and giving a false police report id.
  • Appointing suppliers from the family and paying high invoices because receiving a kick back.
  • Pretending that a relative has died to claim compassionate leave
  • Raising credit notes to cover tracks in invoice fraud.

The scary thing is that they have all happened to customers of Redwing Solutions in the last 15 years.

Avoiding being a victim

Whilst not all staff will be motivated to commit fraud, all staff are capable of fraud and you should look at ways to reduce their means and opportunity.  The heart of this comes from the culture of your organisation.  If you have a positive culture or mutual trust and respect you may fall victim to employee fraud less often than an employer that doesn’t recognise and value its staff.  However it’s not just the environment that places you at risk.  If you don’t have processes to check, validate, authorise – your staff may find the means and the opportunity to commit employee fraud. 

Expenses Policy

My top tip with expenses is to develop a clear Expenses policy so everyone knows the rules, ensure that expenses are robustly authorised and checked, and be prepared to challenge as mistakes do happen!,

With the Expense Claim form get it signed after a brief declaration that the employee believes these to be true and accurate and understands that false claims may lead to disciplinary action and even dismissal.

A detailed expenses policy should also set out what action will be taken in the event of a fraudulent claim.  In the event that you suspect a fraudulent claim has been made you should withhold payment until such time that a full investigation has been carried out. 

If it is not found until after payment has been made it may be possible to recover provided that the contract of employment allows for such recovery to take place. 

If you want to talk in confidence about any aspect of Employee Fraud, please just give us a ring on 01527 909436. 

Here’s an example of employee fraud from August 2016 link

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