The Association of Certified Fraud Examiners has just released the 2008 Report to the Nation on Labor Fraud and Abuse. Based on data from 959 occupational fraud cases investigated by Certified Fraud Examiners between 2006 and 2008, this study is an in-depth analysis of the causes, costs, and ramifications of workplace fraud.
According to the report, there are several red flags that indicate the possibility that an employee may commit fraud. These indicators consist of behavioral patterns that management should be aware of when trying to detect and prevent fraud in their organization. While not all indicators are listed here, the following five red flags are critical warning signs:
1. Live beyond one’s means. This is the most common trait found in employee theft cases. The need to maintain a prosperous lifestyle often leads to shame and other crimes.
2. Financial difficulties. Sudden or persistent money problems can drive normally honest employees to desperate acts.
3. A “wheel dealer” attitude. Employees acting in a conniving or scheming manner were often found to have committed fraud. More than 20% of the cases studied involved a perpetrator who demonstrated this attribute.
4. Refusal to take vacations. Often viewed as “the perfect employee,” many scammers refuse to take vacations because they fear their scheme will be discovered in their absence. In fact, this is one of the most common ways internal theft is detected.
5. Past Employment Problems. Past behavior is a good predictor of future performance. If an employee has stolen from your company in the past, there is a good chance that he will steal again. Pre-employment screening is a great way to identify this red flag.
These indicators are not guarantees that an employee is currently stealing or planning to steal in the future. They are simply red flags that employers can look for to detect and prevent fraud before it brings their business to a standstill. Employee assistance programs can help at-risk workers before the problem gets worse. For more information on the Postponementcontact the Association of Certified Fraud Examiners at http://www.acfe.com.
