Employee Fraud Causes Substantial Damage
The Association of Certified Fraud Examiners (ACFE) releases an annual report on occupational fraud. Occupational fraud refers to any fraud that occurs when:
An employee use their position within an organization;
To gain personal profit; and
Company resources or assets were misused in the process.
Essentially, employees committing fraud against their own company are extracting money from their company for personal gain. Occupational fraud fits into three main categories: corruption; financial statement fraud; and the misappropriation of assets. Unsurprisingly, employees who are higher up in organizations are much more likely to commit the highest levels of fraud. However, it might be shocking to learn just how often employee business fraud occurs. Further, most employee fraud cases result in major damage. According to the report, the median fraud case results in a loss of $145,000. Astonishingly, 22 percent of all occupational fraud cases involve more than $1 million in fraudulent activity. On average, it takes eighteen months to catch employee fraud. Many employees get away with it for several years.
Your Company Can Take Action to Help Prevent Employee Fraud
It is important to always remain vigilant as a business owner. Unfortunately, employee fraud is only one of a number of different forms of business and consumer fraud. However, there are things that a company can do to prevent employee fraud. The following is a list of steps your business should take that will help reduce the risks:
Deposit all checks, money orders and cash immediately;
Regularly review all of your financial statements;
Occasionally hire outside parties to conduct an independent review of your business records:
Distribute key responsibilities among several employees to add additional safeguards;
Do background checks on all employees, especially those in high risk positions; and
Never sign blank checks or allow account transfers without verification.
If you believe that employee fraud is occurring, you need to remain calm. Do not start making accusations without full evidence. A false accusation could actually result in legal action being taken against your company. Let an experienced business fraud attorney comprehensively review your situation; your attorney will make sure your business is protected and will help you determine exactly what to do next.
If your company has been damaged by the fraud of a trusted employee, you need to contact an experienced attorney right away.
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