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Workplace Fraud Prevention Tips

In some cases, it’s necessary for managers to assume the “Big Brother” role within their organization in order to boost workplace fraud prevention.

Posted by Joe Gerard on March 9th, 2010

Chances are, if you know you are going to get caught, you won’t do it. At the same time, employees need a clear outline as to what is acceptable and what isn’t, so they can refrain from activities that are not allowed at work. In some cases, it’s necessary for managers to assume the “Big Brother” role within their organization in the fight against fraud.

When employees know someone is holding them responsible for their actions and that there are consequences, you will notice a difference in the decisions they make.

Here are some tips to integrate into your workplace to improve your workplace fraud prevention.


Workplace fraud prevention protects your organization from reputation damage and costly legal fees.

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1. Hire Wisely

Sherrie Bennett wrote an article on, recommending businesses to follow through with background checks of potential job candidates. Conduct police reports, reference checks and personality testing. Ask previous employers about any reasons for concern regarding the candidate. Make sure that you are hiring the candidate that is the right fit for your company and demonstrates a clean history.


2. Increase Training and Education

Internally, it’s usually your employees who are aware of fraudulent actions or theft taking place while at work. Remain upfront with employees. Train them on company policies regarding fraud and theft and make them aware of the consequences they face should they commit such acts. Give employees the proper tools and techniques to report an incident.

It’s also important to let employees know the risk that theft and fraud place on a company. An article by fraud examiner Larry Cook also suggests that you should have employees sign a terms of agreement form to acknowledge that they have been given and understand the information presented.

Share with employees the effects of fraud and theft, and that even the smallest acts can lead to large consequences. Your company name is riding on the backs of your employees- they are your ambassadors, let them know that.


3. Establish a Reporting System or Hotline

As mentioned above, employees are your number one resource for workplace fraud prevention and detection. As time goes on, it has been recognized that employees are speaking up more frequently when they detect suspicious acts at work.

An article by forensic accountant/ fraud examiner Tracy Coenen, suggests the implementation of hotlines because “the ability for anonymous reporting of fraud encourages employees to look out for the best interests of the company, without fear of reprisal.”

i-Sight’s investigation software is a great system that is easy to use and allows you to track these tips as they come in and keeps all details in one place as you carry out your investigation.


RELATED: 5 Ways to Ensure Your Ethics Hotline is Successful


4. Encourage a Positive Work Environment

Develop a mutual respect between employer and employees.

Tracy Coenen encourages managers to establish an open door policy. The physical act of leaving your office door open during times where you are able to meet with employees makes it much easier for employees to communicate with you. Give employees time to speak with you and don’t play favourites.

Larry Cook states that “a positive work environment encourages employees to follow established policies and procedures, and act in the best interests of the organization. Fair employment practices, written job descriptions, clear organizational structure, comprehensive policies and procedures, open lines of communication between management and employees, and positive employee recognition will all help reduce the likelihood of internal fraud and theft.”


5. Assess Your Internal Security Policies

Establish and assess the fraud and theft prevention tools that you have put in place. Make sure that you are meeting laws and regulations, accurately documenting expenses and accounting documents and make sure to stay on top of anti-theft and fraud training.

Make sure that employees are following policies, address any questions or concerns that they encounter with the policies and update policies as time goes on to ensure compliance with changing laws and regulations.

Larry Cook lists three types of controls to put in place:

  • Separation of duties: No employee should be responsible for both recording and processing a transaction.
  • Access controls: Access to physical and financial assets and information, as well as accounting systems, should be restricted to authorized employees.
  • Authorization controls: Develop and implement policies to determine how financial transactions are initiated, authorized, recorded, and reviewed. Internal controls will reduce opportunities for fraud.



6. Conduct Audits

Conduct both scheduled and random financial and accounting audits. Tracy Coenen points out that “when employees are aware that there will be random checks of their areas, they’re more likely to be honest. Also, they will not feel singled out when it’s their turn for an audit.”

Make these audits part of company policy- this way it demonstrates to employees that you are taking the necessary measures to protect the company against theft and fraud. When audits are part of company policy, employees expect audits to take place, therefore, audits are also an investigation tool, as they can be a great source of evidence.


RELATED: 5 Internal Audit Red Flags That Should Trigger a Fraud Investigation


7. Pay Attention to Change

A key investigation technique is to be aware of changes in employee actions. There could be multiple reasons to cause an employee’s pattern of behaviour, but you may want to monitor these changes in case something happens down the road- these changes should be documented, as they can be used as a source of evidence if an investigation occurs.

Sherrie Bennett writes that it is important to pay attention to employee problems, “if possible, make sure your employees feel comfortable enough with management that they can come to you if they’re having financial difficulties that might tempt them to take from the company.”


8. Investigate All Tips

It’s best to investigate, or at least make an inquiry into every incident reported regarding theft or fraud. In order to address the matter quickly and show your commitment to the workplace anti-theft/ anti-fraud policies, action must be taken immediately.

The faster you look into the incident and can resolve it, the better your chances for avoiding repeat problems or snowballing into BIG problem that could tarnish the reputation of your company.


9. Lead by Example

Larry Cook writes that “every employee — regardless of position — should be held accountable for their actions.” In order to get your employees to believe that you are committed to fighting workplace theft and fraud- and get them to commit to honest practices as well, you need to make sure that all of your actions send the right message.

If you’re going to take the time to get employees to follow anti-theft and anti-fraud policies, they will only take you seriously if everyone is held accountable for their actions and there are no exceptions made for any incidents.


10. Continuously Improve

Tracy Coenen writes that “management should be constantly looking for ways to improve policies and procedures. Workplace fraud prevention is an ongoing, dynamic process that requires continuous evaluation and improvement.”

Stay current on changes made to financial and accounting laws and regulations- train employees and notify them of the changes so that they are aware of the update. Develop a training schedule in order to train new employees, as well as provide training to present employees, to continue demonstrating your commitment to an honest, open workplace.

Communicate regularly with employees and stick to audit plans- if you make changes, cancel or cutback on any of the established control measures, employees will notice and it could begin to seem that you have lost your focus regarding the prevention of workplace theft and fraud.

Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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