6 Helpful Tips for Preventing Theft & Fraud in the Workplace

Sharing confidential company information, stealing equipment and manipulating data are all serious offenses in the workplace. Employee fraud and theft rates have increased in the past decade. These crimes now equal an average of five percent of a company’s annual revenue. The following tips help prevent fraud and theft in the workplace.

1. Check references thoroughly. Many employers avoid checking candidates’ references. They often make the mistake of assuming that a candidate would not put a reference on the list if that contact would not give a glowing report. However, many candidates provide erroneous phone numbers for personal references. In addition to this, previous employers may reveal important information about that worker’s history and tendency for fraud or theft.

2. Conduct pre-employment background checks. This is an important step for any employer to take. However, it is especially important for employers hiring people who will handle cash or have access to sensitive financial information. Keep in mind that there are only certain pieces of information that can be used in hiring decisions. Since each state’s laws vary regarding the use of criminal history information use, be sure to contact the local EEOC for specific laws and guidelines.

3. Use audits when necessary. Auditing can create suspicion and mistrust among employees, but it may be essential for detecting fraud and theft. When employees know they are being monitored, they are less likely to take such risky steps. Keep in mind that criminals take advantage of weak controls, so audits are a good way to close those gaps. The Association of Certified Fraud Examiners offers helpful tips for areas of the business to monitor and how often to audit various areas.

4. Develop a code of conduct. Telling employees not to do certain things will not ensure obedience. However, a written code of conduct establishes guidelines and gives employees a better idea of the company’s principles. After it is written, this document should be signed by all new and existing employees. There are plenty of great free templates available online. Keep in mind that it is important to include policies specifying company data protection. Be sure to go over the code of conduct during orientation sessions for new employees. It is also important to review the code each year. Some items may change. For example, a company may develop connections with new agencies or businesses, and specific conduct codes may be needed to guide employees in dealing with specific companies.

5. Take management seriously. Creating and communicating a business climate is one of the best ways to prevent fraud or theft in the workplace. This also shows employees that these issues are of the utmost importance. The following steps are easy and help keep employers informed:

-Make sure employees know they can speak freely with employers any time to discuss concerns or report violations.
-Reconcile statements regularly to detect fraudulent activity.
-Implement strong internal controls.
-Always trust individual instincts.
-Offer help to employees when they face difficult times or stressful situations.
-Conduct frequent one-on-one reviews with employees.
-Investigate unusual transactions.
-Make employee vacations mandatory.

6. Know what to look for. Research shows that workplace criminals commit crimes because they feel unappreciated, are under pressure or feel that management practices are unfair. They usually feel that they are owed something for these misinterpreted offenses. With that thought in mind, look for the following red flags:

-Unexpected changes in behavior.
-Employees who prefer to work after hours, take work home or be unsupervised.
-Workers who are exclusive or very protective of their work spaces.
-Employees who refuse to take vacations.
-Financial records disappearing frequently.
-Unexplained debts showing up on financial statements.

An employee who appears to be very dedicated to work may be an honest worker, but some individuals who seem this way have their own reasons for their behavior. Many financial violations show up while an employee is on vacation. Workers using a suspicious individual’s work space may discover incriminating evidence. Employees who take work home or want to work after hours may simply want privacy to perform their dishonest deeds. Diligence and careful monitoring are the keys to preventing workplace fraud and theft.

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