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Checks and balances at every level

WHILE the potential for theft and other forms of fraud committed by employees always exists, the risk can increase in recessionary times as more people feel financial pressures.

WHILE the potential for theft and other forms of fraud committed by employees always exists, the risk can increase in recessionary times as more people feel financial pressures.

Where an employer suspects that some form of dishonest activity is taking place it is important they pick up on some of the potential warning indicators.

These can include changes to an employee’s lifestyle or high value purchases being made which are out of step with the individual’s earning potential. One of the good sources of information can be tip offs from other employees and employers should consider having some form of “whistle blowing” policy under which concerns can be confidentially raised.

Everyone within a business should be subject to “checks and balances”. It is important no-one is immune from having their activities scrutinised. While some very junior staff can steal stationery or exaggerate their expenses, some of the largest scale frauds have been perpetrated by the most senior people in a business and these can have a catastrophic effect. Cases such as those of Enron or Bernie Madoff spring to mind”

Where internal fraud is suspected at any level it is important that organisations react in a proportionate and systematic way to establish whether initial suspicions are well founded. Reputable organisations should have a fraud investigation policy which can be instigated where potential problems come to light and there are many organisations who can help businesses, big and small to put these in place.

Beyond this, however, is the need to handle internal discipline or prosecution correctly. There is the danger an employer who correctly discovers that fraud has taken place may weaken there position by mishandling how their concerns are put to the individuals involved. Most small employers will not have a specialist human resources function and can compound their original problem by mishandling the resultant disciplinary process when fraud has been detected.

There are many sources of advice on how to handle disciplinary action in these cases and in the worst cases police prosecutions will result. The key messages for employers are that they should have checks and balances at all levels, investigate concerns systematically and ensure that concerns are put to employees through a disciplinary procedure which is compliant with employment law.

Alan Brown is chairman of the North East Fraud Forum. For more information on the NEFF and how to become a member, check www.northeastfraudforum.co.uk

 

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