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Tackling Employee Fraud

Apply for a DBS Check

The figures are startling – around £40 million lost each year by UK businesses due to fraud by employees. Fraud within organisations takes many forms, from the simplest type of fraud whereby someone just steals cash from their workplace, to more complex types of fraud where the employee manipulates accounts of their friends or family. Tracking down fraud can be tricky, but there are certain “red flags” which might indicate there’s something going on to worry about.


Not taking holiday or ever being sick

This sounds like the ideal employee, right? Someone who is reliable and hard-working. But could it be that they are worried about being away from their position for a week or more as this might give whoever is covering their job to discover what they’ve been doing? It’s dangerous to have an organisation with such clearly defined roles that each person only does one job, and other people can’t cover their roles when they’re away.


Lifestyle Changes

Often the most obvious indication that an employee is defrauding your business are changes in their lifestyle such as new gadgets, jewellery or expensive holidays. Fraudsters know this and are unlikely to be stupid enough to come into work bragging about their new purchases to their boss. They might be less discreet on social media or with their colleagues though, so keep your ear to the ground for any rumours or gossip about lavish lifestyles and always keep potential fraud in the back of your mind.


Personal Debt

Studies show that many employees who defraud their employer are doing so because they have significant debt or credit problems at home. They often start by “borrowing” money with the aim of paying it back later, but then the problem snowballs to the stage where paying it back isn’t possible. Employers don’t have the right to automatically run credit checks on all of their employees, but it’s not illegal to ask someone about bankruptcies or debts when you’re employing someone to work in a situation where they will be handling cash or in a position to move money out of the company’s bank account. In some positions, such as working in a bank or as a chartered accountant, a standard DBS check might be carried out on employees to see whether they have convictions for fraud in the past, but this will not reveal the current state of their finances.


Paperwork Going Missing

One of the most common ways of committing fraud is to set up a fake company, invoice your employer and then receive money into your own bank account. Often, fraudsters will try to cover their tracks by deleting transactions from the accounting system, losing emails or shredding fake invoices. It’s important to have a robust system for logging and keeping invoices and other transaction details, and then have your accounts thoroughly investigated and audited regularly. Fraudsters will try to cover their tracks, but auditors have seen all the tricks before, and will be able to uncover any employee fraud within your organisation.