Detecting Corporate Fraud Through Employee Tips & Referrals

When instating measures to prevent workplace fraud, the goal is to establish a system with the ability to stop fraud before it even happens.

Posted by Joe Gerard in Code of Conduct, Corruption, Ethics, Ethics & Compliance, Fraud, Hotlines, Human Resources, Whistleblower on April 5th, 2010

When instating measures to prevent workplace fraud, the goal is to establish a system with the ability to stop fraud before it even happens. Companies want to hire honest employees that have beliefs and ethics similar to those of the company, in order to create a culture where it’s mutually understood that fraud and unethical business practices are unwelcome- and harshly punished. The ultimate goal of ending corporate fraud altogether can be very difficult. Therefore, many companies set their sights on earlier detection of fraud and focusing on a decrease in the number of cases and expenses tied to corporate fraud on an annual basis.

When companies invest in reporting channels and internal measures to prevent workplace fraud, it becomes harder for employees to commit fraud, as they know that they are being watched and there are fewer chances for the fraudulent act to take place and remain unnoticed. In 2008, the weapon of choice when it came to reporting issues of internal workplace fraud or misconduct was the use of tips/ complaints from employees, vendors, customers or another source that had information regarding the activity.

The ACFE Report to the Nation on Occupational Fraud and Abuse:

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The Association of Certified Fraud Examiners 2008 Report to the Nation on Occupational Fraud and Abuse shows not only an increase in the use of tips as a fraud detection source since 2006, but it also depicts just how many more fraud cases are detected through this particular method. The data in the graph below comes from the 2008 Report to the Nation on Occupational Fraud and Abuse, showing the percentages of cases reported through specific channels, as well as any changes in their usage when compared to the respondent results from the survey in 2006. The 2008 Report to the Nation on Occupational Fraud and Abuse also found that of the cases identified through hotline tips in particular, approximately 58% of them were tips provided by employees of the company. The next largest group providing tips were company customers, reporting almost 18% of cases detected through the use of hotlines.

Gathering Tips

With the above statistics, it’s easy to see the importance of the role that your employees play in the detection of fraud. Hotlines and other anonymous reporting tools are methods that make it easier for employees to communicate any observed fraud activities or misconduct that they encounter. Internal audits and internal controls are other important contributors that lead to the fact that the easiest ways to detect fraud come from within- you just need to have tools in place that allow these forms of internal detection to occur. Solutions such as i-Sight Investigation Software allow you to receive notifications of new cases or complaints made through multiple channels- including your hotline provider, internal webform, or directly from employees. This type of hotline integration allows new cases to be funneled into i-Sight immediately. New cases are placed automatically into the New Referrals Queue, where they can be reviewed by a manager and acted upon.

Another option is to send e-mails to i-Sight. Many teams that work outside of an investigative case management system use e-mail extensively.  Those working on an investigation send e-mails into a shared folder. Here, messages are collected and reviewed before being acted upon.

i-Sight allows you to keep that process – you don’t even have to change the e-mail address being used. These e-mails get redirected to i-Sight and a new case is automatically generated.

Since i-Sight is web-based,  users record new cases in a web form. This can take the form of a referral form that is place on a company’s intranet, website or portal. This simplifies the collection of both internal and external referrals and tips. All of these options are flexibile and easy to implement in order to better manage incoming tips and the investigation process. i-Sight then makes it easier for your investigations team to manage cases, proiritize cases based on risk, identify repeat offenders and track trends based on the nature of the allegation. i-Sight provides you with the following benefits:

  • Meet regulatory and legal guidelines
  • Improve communication across the enterprise
  • Centralize case information
  • Effectively manage milestones and key dates
  • Automate reminders and other alerts
  • Identify and understand trends
  • Accelerate the case resolution cycle time

Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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