A number of businesses are often stripped down due to employee fraud. This has affected not only small businesses but large businesses are damaged too. Their main target is to rip off the company, no matter what sector it falls under. But, the banking and financial sectors are hit harder than any other.

When inquired about the cause and what led to this fraud, the most common answer was their internal securities were too weak and hence, their inability to detect any criminal incidents. More than 50 percent of the cause was directly pointing out to their failure to provide sufficient safety and security to the properties or data.

Whereas, the leading cause of such fraud by an employee is shown to be financial debt or shortage of income. The greed to earn more and become rich is the second reason behind their behavior.

With all these growing numbers, companies ought to take some precautionary steps by this time. No loss is small and precaution is the best measure.

Fraud reduction strategies

1. Limit physical access


Access to business details, customer information, filing cabinets, cash registers, etc. should be limited only to the personnel who are involved in each sector. Consider installing a surveillance system to monitor the employees’ movements. Also, enable systems that can record any changes made by anyone in documents or systems.

2. Keep eye on employee behavior


Employee behavior can act as an identifier that he is trying to commit fraud or is in the act of doing so. The key signs are:

  • The employee rarely takes leave or works outside the office hours;
  • Late lodgement of compliance forms such as tax returns;
  • Does not report or reconciliations;
  • The employee may live or spend beyond their means.

3. Inquire about every incident


Every incident that took place in the workplace before and after the fraud must be investigated carefully. Consider all the facts such as fraud warning signs, fraud allegations, and violations of any policy or procedure. This will reduce the extent of loss and help in better decision making.

4. Positive work environment development


A positive work environment creates a positive feeling and encourages the employee to follow all the policies, rules, and regulations and behave in their best way at the workplace. It is important to practice good behavior, job responsibility clarity, positive employee recognition, fair employment practices, clear organizational structure and keep an open space for communication between the employee and management thus reducing employee fraud.

5. Code of Conduct


A code of conduct outlines all the rules, regulations, and ethics that must be created to inform the employee of any fraudulent behavior in the organization. It should clearly state the zero-tolerance policy of any fraudulent activities and the penalties associated with such acts. It should also state that any such act will be reported to the police no matter at what level of the business it is committed at. It should also clarify the constitution of employee fraud as most of the time employees complain of having not understood it.

6. Treating everyone equally


A very important point to keep in mind while designing a company policy is that everyone in the organization will be treated equally for any fraudulent activity and that everyone regardless of their seniority should adhere to the policies.

7. Whistleblowing policy


A whistleblowing policy is when an employee can anonymously communicate or convey the fraud information to the concerned authority, without facing risks of any sort. This policy details the necessary steps that have to be carried out if the employee doubts anyone of potential fraud. The whistleblower must be assured they do not face any trouble or any negative effects when blowing the whistle. The concerned management should also demonstrate that all the issues brought up through the whistleblowing technique shall be acted upon.

8. Design a policy manual


A company should clearly indicate the company policy and the procedures that will be taken if the policies are not followed. All the employees should be trained on it and must have access to all the information whenever they need to. The report should be regularly made to senior management. The policy should state information about the zero-tolerance policy and that everyone must adhere to them. Failure to do so will procure some sort of punishment.

9. The right recruitment procedure


When planning to recruit a new employee, there’s a lot of dilemmas to face. But with the right recruitment procedure, this could bring some peace. The most important thing to consider during the hiring process are:

  • Utilizing social media screening techniques to study on the potential employee. Social media can act as a way to see the applicant’s social behavior.
  • Reference checks to ensure their ex-employer was happy with their performance at work.
  • Demand an explanation about any employment gaps and verify any past employment.
  • For employees seeking work in the finance sector or cash handling, a credit check is a good way to start with.
  • Police checks help to find all the criminal history or history about any convictions about the particular employee. It can be obtained as fast as within 48 hours. Companies in Australia are increasingly using the services of government accredited agencies that operate completely online. Anyone can get an Australian police check online at and the result will usually be dispatched in less than 48 hours.
  • Qualification verification is another important document that should be checked. It can be done by contacting the institute that provided the certificate.

There are other things that can be considered apart from the aforementioned strategies.

  • Review all the bills and bill errors created by customers.
  • Regularly check the financial transactions/statements and bills.
  • Never sign incomplete cheques.
  • Check the payroll payees and compare them with employee records.
  • Audit the books by an outsider accountant.
  • Payments should be made only on original invoices.
  • Ensure the employees take annual leaves.
  • Unusual bank transactions shall be questioned and investigated

Winding it up

These are just some of the ways one can combat fraudulency at the workplace and provide security. This will not only create a positive working environment for employees. But will also increase productivity for sure. A police check can be one way of addressing the workplace fraudulency as it provides the employer with the data or information about the applicants’ criminal background.