By Noel Murphy
Unfortunately employee fraud is a fact of business life.
Besides threatening the financial viability of a company it can also lead to low morale and damage a company's reputation.
A recent report in the US indicated that an average business loses 5% of its revenues to fraud.
Bad apples can be employed by any company and their behaviour can spread if controls are not applied and effective action not undertaken when misappropriation is discovered.
In larger businesses payroll fraud can include having false employees and inflated overtime.
Credit card fraud can be as basic as using the company credit card to pay for personal expenses.
Purchasing fraud can involve setting up a false suppliers account and diverting goods for own usage.
Sales fraud may include inflating sales to achieve higher bonuses or sharing the excess charged with the customer.
It is advisable that strict controls be instituted in dealing with cash as this could be the initial source of temptation.
Fraud pointers are staff who appear to be living beyond their means, who may have financial difficulties, are unwilling to share duties or have an unusually close relationship with a customer or a supplier.
The most effective way to counteract misappropriation is to have an effective employee hotline as fellow employees may be the first to see that something is not quite right.
It is better to ensure that theft will not arise as the chances of a full financial recovery are extremely slim.
