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Workplace Theft & Fraud Prevention Tips Part 1

In some cases, it’s necessary for managers to assume the “Big Brother” role within their organization in the fight against fraud.

Posted by Joe Gerard on March 9th, 2010

Chances are, if you know you are going to get caught, you won’t do it. At the same time, employees need a clear outline as to what is acceptable and what isn’t, so they can refrain from activities that are not allowed at work. In some cases, it’s necessary for managers to assume the “Big Brother” role within their organization in the fight against fraud. When employees know someone is holding them responsible for their actions and that there are consequences, you will notice a difference in the decisions they make. Here are some tips to integrate into your workplace to help prevent internal theft and fraud:

1. Smart Hiring

Sherrie Bennett wrote this article on, recommending businesses to follow through with background checks of potential job candidates. Conduct police reports, reference checks and personality testing. Ask previous employers about any reasons for concern regarding the candidate. Make sure that you are hiring the candidate that is the right fit for your company and demonstrates a clean history.

2. Training and Education

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Internally, it’s usually your employees who are aware of fraudulent actions or theft taking place while at work. Remain upfront with employees. Train them on company policies regarding fraud and theft and make them aware of the consequences they face should they commit such acts. Give employees the proper tools and techniques to report an incident. It’s also important to let employees know the risk that theft and fraud place on a company. This article by fraud examiner Larry Cook also suggests that you should have employees sign a terms of agreement form to acknowledge that they have been given and understand the information presented. Share with employees the effects of fraud and theft, and that even the smallest acts can lead to large consequences. Your company name is riding on the backs of your employees- they are your ambassadors, let them know that.

3. Establish a Reporting System/ Hotline

As mentioned above, employees are your number one resource for fraud detection. As time goes on, it has been recognized that employees are speaking up more frequently when they detect suspicious acts at work. This article by forensic accountant/ fraud examiner Tracy Coenen, suggests the implementation of hotlines because “the ability for anonymous reporting of fraud encourages employees to look out for the best interests of the company, without fear of reprisal.” i-Sight Investigation Software is a great system that is easy to use and allows you to track these tips as they come in and keeps all details in one place as you carry out your investigation.

4. Positive Work Environment

Develop a mutual respect between employer and employees. This article by Tracy Coenen encourages managers to establish an open door policy. The physical act of leaving your office door open during times where you are able to meet with employees makes it much easier for employees to communicate with you. Give employees time to speak with you and don’t play favourites. This article by Larry Cook states that “a positive work environment encourages employees to follow established policies and procedures, and act in the best interests of the organization. Fair employment practices, written job descriptions, clear organizational structure, comprehensive policies and procedures, open lines of communication between management and employees, and positive employee recognition will all help reduce the likelihood of internal fraud and theft.”

5. Internal Security Policies

Establish and assess the fraud and theft prevention tools that you have put in place. Make sure that you are meeting laws and regulations, accurately documenting expenses and accounting documents and make sure to stay on top of anti-theft and fraud training. Make sure that employees are following policies, address any questions or concerns that they encounter with the policies and update policies as time goes on to ensure compliance with changing laws and regulations. In this article by Larry Cook, he lists three types of controls to put in place:

  • Separation of duties: No employee should be responsible for both recording and processing a transaction.
  • Access controls: Access to physical and financial assets and information, as well as accounting systems, should be restricted to authorized employees.
  • Authorization controls: Develop and implement policies to determine how financial transactions are initiated, authorized, recorded, and reviewed. Internal controls will reduce opportunities for fraud.

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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