Fraud: Seven red flags you should look out for

According to a survey conducted by PwC, 69% of businesses had experienced some form of economic crime in 2016. This included such crimes as asset misappropriation, fraud and cybercrime.

Fraud is most commonly discovered by companies through employee tips and word-of-mouth – and not through external audits – so here are some red flags for you and your employees to consider.

Sudden, big purchases

If an individual suddenly appears at work in a brand-new car or sporting a high-end cellphone – particularly if you are aware that the purchase would be outside of their salary, or if they have been complaining about being broke or underpaid – there could be something amiss.

A flashy new item does not necessarily mean the employee is stealing – the employee could have purchased on credit or received it as a gift from a friend – but this is worth keeping an eye on.

Anti-social behavior

There are naturally those who prefer to work alone, rather than in teams, but if an employee suddenly begins avoiding co-workers and choosing shifts where there will be few people around, it could be a way of them trying to hide certain behavior.

Changes in work routine and behaviour

If your employee suddenly requests a change in shifts (particularly to graveyard shifts or weekends), starts coming in very early or leaving very late, or begins taking long absences and more frequent sick days, this could be a sign that something is going on.

There might be problems at home, or there might be something more serious – either way, check in with them.

Dodgy documentation

Do you have an employee who regularly “forgets” to submit expenses, or misreports the amount of hours they’re invoicing? A few seemingly small errors of a few hundred rand here and there can build up fairly quickly into a much bigger problem if you’re not paying attention.

Missing pieces

Are you noticing an increase in your products being reported as damaged or lost? Or are you noticing money – including petty cash – being miscounted or disappearing? Once you’re aware of these sorts of problems, make sure to pay special attention to looking for patterns. Are these incidents more common on a particular shift, or when certain individuals are working? Take note.

Past problems

Many employers perform background checks on potential employees before concluding the hiring process to actively seek out any red flags before making an offer. Make sure to hire a reputable agency to conduct criminal record checks – including both past convictions and ongoing cases.

Word of mouth

It’s quite simple – if someone in your company tells you that there is something illegal happening, you need to investigate. It might be difficult for you to do it personally – but that’s where companies like Strongarm – who offer undercover investigations, background checks and revision of CCTV footage – come in.

These services should not only be seen as useful for theft or loss investigations, but also to identify weaknesses in company policies and operating procedures. Undercover investigations allow businesses to glean information that is found “on the ground”, and is not readily available to management

According to Strongarm, “Successful deployment of well-trained and experienced undercover agents is the single most effective company security tactic.”

For more information, visit http://www.strongarmsecurity.co.za/


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