23 Red Flags of Employee Fraud
John Capizzi has been a great friend to Bankers Factoring for over twenty years. His tips on sniffing out employee fraud especially in this time of Covid are essential to any business surviving and thriving. Here is an excerpt from his most recent newsletter.Chris Curtin, Bankers Factoring
An employee living beyond their means should set off a fraud red flag alert. When an employee is living a lifestyle that appears to unreasonably exceed their income, they could be enriching themselves at your company’s expense. They could be skimming receivables, tampering with checks, falsifying disbursements, overstating expenses, and more.
In fact, every year since 2008, individuals living beyond their means topped the Association of Certified Fraud Examiners list of the key warning signs exhibited by fraudsters.
When an employee feels financial pressure, has the opportunity to steal, and can rationalize their behavior, they could easily become a potential fraud liability to your business.
Check out 23 Red Flags of Fraud to learn about other areas where your business may be vulnerable to fraud.
23 Red Flags of Fraud in Your Business
IAS provides you with the best business solutions in detecting fraud and embezzlement. If you say “yes” to any of these red flags located in your business, maybe counts as a “yes,” then you have a problem or one getting ready to start. Be on the lookout for these telltale employee fraud signs:
- An employee under financial pressure.
- An employee with personality changes.
- An employee demonstrating poor money management.
- An employee living beyond their means.
- An employee with outside business interests.
- Poor company internal controls (credit cards, payroll, A/R, A/, etc).
- Too much control in a single employee.
- Lax management.
- Failure to pre-screen employees.
- Records altered, missing or destroyed.
- Chronic shortages.
- Customer or supplier complaints about shortages or discrepancies.
- Signatures on records appear to be forgeries.
- Employee drug or alcohol abuse.
- Employee gambling problems.
- Employee gives inadequate answers when questioned about missing supplies, property or funds.
- An overwhelming desire for personal gain.
- Close associations with customers or competitors.
- Feeling their pay was not commensurate with responsibility.
- A wheeler dealer attitude.
- A strong desire to beat the system.
- Undue family or peer pressure.
- Not enough recognition for job performance.
If you have noticed one or more of these red flags that could mean employee theft or asset misappropriation, contact John Capizzi, Internal Audit Services immediately.