Conducting Effective Employee Theft Investigations

According to a report from the Association of Certified Fraud Examiners, occupational fraud and abuse costs businesses in the United States upwards of $400 billion a year.

Posted by Joe Gerard in Ethics & Compliance, Human Resources on August 18th, 2010

According to a report from the Association of Certified Fraud Examiners, occupational fraud and abuse costs businesses in the United States upwards of $400 billion a year. Today’s business leaders must focus on protecting their brands through prevention and proactive measures to rid their workplace of fraud, theft, violence and other unethical acts. However, managers still need to be prepared to react to these types of events and conduct investigations into reported allegations, as accidents do happen. One of the main concerns facing businesses during times of economic recession is employee theft. As businesses do their best to cut unnecessary costs, they must also monitor for theft, as the costs associated with theft place significant burdens on the organization. We have covered tips for preventing and detecting employee theft in our posts “Workplace Theft & Fraud Prevention Tips Part 1,” and “Workplace Theft & Fraud Prevention Tips Part 2,” therefore, this post will focus on the proper handling of workplace theft allegations and conducting employee theft investigations.

Handling Theft Allegations

All allegations must be treated with the same level of importance.
Whether it’s allegations of employee theft involving physical property, intellectual property, money, supplies or other workplace materials, all allegations must be treated with the same level of importance. When allegations are initially received, investigative or HR managers- whomever allegations and complaints are received by, must designate an appropriate investigator to the case.

There are a number of ways to determine an appropriate investigator. Some organizations choose to filter allegations by location, organization department or type of allegation. Investigation software solutions, including i-Sight, make it easier to control case assignment through built in process rules. Incoming allegations can be held in a pending queue to be assigned manually by the investigative manager, or, new cases can by routed to the designated investigator based on the various filters mentioned above.

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When theft allegations arise, the FindLaw article “Handling Employee Theft Claims,” recommends:

“When a theft is detected, you must move quickly to investigate and discipline the employee. If an employee is caught by direct observation, the “investigation” should be straightforward. However, more often than not, an employee theft is suspected based upon indirect or circumstantial evidence, such as another employee report or in the results of an audit. In such cases, an investigation is necessary. However, do not unnecessarily delay the investigation, since criminal and civil statutes of limitation will begin upon discovery of the loss.”

Software for Managing Employee Theft Investigations

Take Action: Once it has been determined that the theft allegations provide grounds for further investigation, it’s important to determine what to do with the subject (accused employee) while the investigation commences. The action taken will vary based on the nature and scale of the employee theft reported. In the FindLaw article “Handling Employee Theft Claims,” they suggest that sometimes it’s best to leave the employee in their position and monitor their actions to confirm the fraud, whereas sometimes it’s best to immediately suspend the employee until a decision has been made.

Maintain Confidentiality: As with every workplace investigation, ensure confidentiality is upheld to the highest degree possible.  i-Sight provides investigators with the ability to control who has access to entire case files, as information pertaining to internal issues may even require confidentiality amongst members of the investigation unit. Since theft is a criminal offense, information will likely need to be shared third parties. Access can be granted to members of third parties, granting them access to an entire case or specific parts within the case file. Once they have the information the need, access can be restricted once again to maintain privacy.

Confidentiality must also be addressed during investigation interviews, as some individuals being interviewed may be hesitant to divulge information for fear of retaliation. Remind interviewees that retaliation isn’t permitted and if they feel anyone is acting in a retaliatory manner towards them, to report it. Communicating the company’s commitment to investigation confidentiality will allow for stronger information to be collected, greatly improving the quality of the investigation.

Stay on Track: Employee theft investigations not only require immediate attention but must also be conducted in a timely manner. A company that has already lost money due to theft cannot afford to lose additional money by being slapped with a lawsuit for negligence. i-Sight keeps investigators on task by using a system of approvals and alerts that make it easier for investigative managers to keep an eye on the progress of their investigators. Alerts are used to inform investigators of newly assigned cases, task assignment, inactivity or overdue tasks and approval requests (confirming ownership of cases and tasks). By selecting due dates when assigning cases and tasks, alerts keep investigators on top of their investigations and ensure that no step is overlooked.

Repeat Offenders: It’s important to be aware of an employee’s involvement in previous theft incidents. It has been reported that many employees commit an act of theft more than one time within their organization. Identifying repeat offenders helps determine a suitable punishment to be administered when the investigation has concluded. i-Sight makes it possible to identify repeat offenders through case linking and search functionalities.

Track Restitution Payments: One of the best features of i-Sight Investigation Software, for theft investigations, is the ability to track restitution payments and case-related expenses. This information is stored directly in the case file and alerts can be sent if restitution payments are not made on time. This helps companies gain back monetary losses they have incurred, while holding the subject accountable for making timely payments.


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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