Six Vital Tips For Preventing Employee Theft And Fraud In The Workplace

August 7, 2015 5:14 pm0 commentsViews: 219

By : Shivli Ratur

theft_1Employee theft and fraud can be considered as serious concerns for all business organizations, whether it’s about downloading or sharing confidential business information or manipulating expense reports or stealing company asset. In current research studies, occupational fraud may result to the loss of 5% of the annual revenue of the business. Hence, we enumerate six vital tips for preventing and managing employee theft or occupational fraud. 

Check the background of the applicant prior employment

One of the major steps to prevent fraud within the organization is making the right decision when hiring. Basic pre–employment background checks are considered to be a good practice for prospective employees, especially for those who would be considered to handle cash or high value asset or sensitive company data. Be sure to check all the declared professional licenses, government licenses and other social contacts or club memberships.

Check the candidate references before hiring

It is surprising how some employers don’t bother to check out the references of a candidate especially when the candidate’s personality and profile looks very impressive. It is always a good practice to check past employer references to validate the data provided by the candidate.  This vital check will let you know if your prospective employee is telling the truth or whether there was history of fraudulent behavior in the past.  There’s no sense in hiring a dishonest candidate. 

Communicate the rules of conduct

Every business organization must have company code of ethics which outlines the rules of conduct, policies and procedures for each and every member of the organization.  As this contains the standard rules to be followed company-wide,   they should set the guidelines and clear benchmark for employee behavior.  The company Code of Ethics should be disseminated to all employees, especially the newly-hire, in printed manual or booklet format. You can always find standard templates for basic company code of conduct in the internet, but it is better to include your own set of policies and procedures that would adapt to the company culture. Some of the most common ethical standards relate to hiring practices, maintaining a safe and healthy work environment, use of business resources and rules on conflict of interest.

theft_2Do performance and behavior audit

Performance and behavior form part of ethics.  Most ethics audits are based on checklists that correspond to the company’s code of ethics. A company-wide audit process usually starts by auditing the ethics policy before moving on to auditing individual areas and departments. Conducting regular audits could help you locate the theft and fraud happening within the organization but audits can also be a deterrent to fraudulent activities as employees will be more conscious to follow the rules and guidelines.

Recognize the important signs

Research studies have shown that business theft or fraud are committed by employee perpetrators because of too much job pressure, too much stress and demotivation or wrong perception.  Most of these depressed employees who were never appreciated in their jobs already lack the motivation and perceive that management is not ethical and fair.  Some of the most potential red flags to look out include the following:

  • ·Unexplained employee debt
  • ·Unexpected change in employee’s behavior
  • ·Frequent absences or tardiness
  • ·Missing files or financial records
  • ·Disorganized files and work schedules
  • ·Non-disclosure of required data or information

Set the right management tone

Top management, guided by proper motivation and communication, should create a business climate that demonstrates to the employees that company policies and procedures are being implemented seriously. Here are some of the simple tips for managers :

  • ·Have a regular schedule of staff meetings
  • ·Require employees to take vacations
  • ·Trust your instincts
  • ·Create strong internal controls
  • ·Offer help to employees who are experiencing stress or difficult times within the organization
  • ·Lead by example


This article was written by Shivli Ratul, Marketing Operations Manager at Expenzing.  Shivli focuses on the growing Expense Management software product and communicates  the value of identity to customers, partners, and the larger community by targeting specific markets through segmentation and  analysis. 


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