Annual reports from BDO’s Fraud Track states that fraudulent activity cost the UK almost £750 million in the last year. But while this is a reduction from previous years figures, this could simply be due to lack of reporting, with only an estimated 1 in 50 cases likely to be reported.
A fraud conviction can result from any kind of false representation, abuse of position or causing loss to someone else, in order to make a gain for either yourself or someone else. Fraud can range from lying on your CV through to embezzlement and everything in between, and it can affect your future job prospects.
According to a recent report from accountancy firm RSM, employee fraud cost UK businesses £40m last year. With reported crimes including payment fraud, client record fraud and thefts from the workplace, this figure is thought to be the “tip of the iceberg” according to Akhlaq Ahmed, RSM’s forensic partner.
Fraud can be classified in three ways, deception or misrepresentation, omission or abuse of position and can be tricky to prove. All instances of fraud in the workplace must be dealt with swiftly, but in all cases, prevention would have been better than cure. And the best prevention is a clear communication of expectations and an open company culture.
Ensure all staff are fully aware of company policy regarding fraud from the moment of hire. Give new employees a company handbook outlining their responsibilities and make reading and understanding it a contractual obligation. Give continuing staff regular reminders of current company policy.
If there is a suspicion of fraud in the workplace it is imperative that intent is proven. In some cases, the staff member involved may not realise they are doing anything wrong, for instance by taking company property home for remote working or claiming for expenses which are not covered by their contract.
In cases where full intent is clear, ensure you have the evidence to back up your claim. Inform staff of instances of fraud, ensuring Data Protection procedures are followed, which will send the message that fraud will not be tolerated.
Encouraging a culture of honesty within the company will help staff feel comfortable in coming to you should they suspect their co-workers. Ahmed recommends that organisations have up to date whistleblowing procedures which encourage employees to be confident in reporting their concerns.
Avoiding employee fraud is an ongoing battle but ultimately can be prevented for the most part by incorporating the right company culture from the start.