• Posted by: Sanjeev
• 10 Apr, 2024

Signs of Employee Fraud You Can

Employees are the backbone of any company and employee fraud is like termite, which makes the entire organization hollow. Employee fraud refers to the practice where an individual or a group of individuals, earn some wrongful gain at the expense of their employer. These disgruntled employees cause harm to the company they work in through corrupt and dishonest practices. Dishonest practices can harm in many manners. The harm to the company can be in terms of reputation, financial, organizational, or any other manner. Common types of employee fraud include a commission from vendors, embezzlement, company property fraud, asset misappropriation, inflated purchasing, and corruption. In embezzlement, employees misappropriate funds entrusted to them, diverting money for personal use. In some financial frauds, the employees manipulate account entries for personal gain. They sometimes do it to inflate the shares for insider trading. Companies own various properties, which can be in the form of physical properties, bank accounts, hard cash, or intellectual and technical properties. Corruption involves employees abusing their position for personal gain, often through bribery or kickbacks. Some employees from purchasing also favor vendors and give company work to them on quid pro quo. These employees receive kickbacks and it also qualifies as bribery.

Employee fraud puts a lot of strain on the health and overall functionality of the business. The impact of employee fraud on companies can be severe and cause long-term damage. The immediate financial loss and the loss of reputation are quite visible but the long-term effects are indiscipline, trust deficit, and panic amongst investors, partners, and other stakeholders. The morals of employees are shattered and even those employees who are rightful lose trust in each other. The employees start disbelieving each other, hence creating a feeling of mistrust and disbelief amongst themselves. The plan of companies goes for toss and employee fraud shakes the very fundamentals of the company. Fraud by employees does not cause only financial loss but also may lead to legal troubles. In some cases, the fallout from employee fraud can be so substantial that it jeopardizes the very survival of the business. The financial loss coupled with the fact that employee fraud causes moral bankruptcy can potentially threaten the existence of a business and destroy it completely. Many companies in the past have turned bankrupt due to employee fraud. Employee fraud can perish a large company.

The harm caused by employee fraud extends beyond the immediate financial and operational disruptions. Companies and business houses are like a fabric, and the fate of all the stakeholders: owners, investors, employees, vendors, and affiliates are knitted together. A wrongdoing by an individual or group of individuals can completely tear down this fabric and the inseparable threads can start destroying each other. If the fraud leaves undetected and unpunished, it acts as a source of discouragement for other employees. Even righteous employees can potentially turn into wrongdoers. It’s like a bad apple spoiling the entire basket. The discovery of fraudulent activities can lead to internal strife, with employees questioning each other’s efficacy and integrity. In addition, the focus on core business vanishes and it also gives scope to office rumors, gossip, and speculation. The environment in the business house is severely affected, thus a multitude of problems arise out of it. Ultimately, the repercussions of employee fraud damage the company completely and it is destroyed if activities are not controlled within time.

Signs of cheating employees, how to identify employee fraud

An employee who is cheating and in the process of committing some fraud gives sufficient indications. For the management, it is important to identify these aspects so that some precautionary measures can be taken before any damage. There can be behavioral red flags also, which are typical of a person trying to avoid trying to evade suspicion. The motive for cheating with the company is mostly financial and the employee who cheats gets rewarded for the betrayal, which is reflected in the lifestyle. Such employees start spending more and end up spending money which is disproportionate to income. Because the money earned is easy, such employees start living a flamboyant and flashy lifestyle. Anomalies in financial records, such as unexplained discrepancies or inconsistencies in transactions, could also serve as early warning signs. Therefore it is always advisable that a third-party audit of accounts is essential in such cases. When such employees conceal something, they hardly take a day off and do not divert their responsibility to someone else. Unusual working hours, reluctance to take vacations, and not mixing up with other employees also are signs of cheating employees. Also, such employees will have a multitude of grievances against the company and will always be complaining. Institutes and organizations need to identify and spot these signs early on, to save the company from potential risks and threats, and foster transparency, growth, and accountability within the company. The workplace should be treated as a sacred place. Rotten fruits are not kept in-house, likewise cheating employees need to be shown the doors as early as possible.

Businesses hiring the services of expert private investigators to catch cheating employees

Private detectives are experts and provide invaluable help to business houses, in case of fraud employee investigation. Private detectives play a pivotal role and render professional help in cheating employee investigations. Companies are increasingly relying on the expertise of private investigators to uncover and address fraudulent activities within their ranks, particularly when dealing with suspected cheating employees. Private detectives employ the best methods and techniques to gather proof and evidence against cheating employees.

Private detectives use a variety of methods to catch fraudulent employees and save the company that hires its services. Surveillance investigations are one of the first investigation techniques, which is employed by private investigators to catch cheating employees. In discreet surveillance, the cheating employee is followed and kept under the watchful eyes of private investigators. The presumption in such cases is that the cheating employee will meet someone, to pass on the information or receive kickbacks. The PIs regularly take photographs and video visuals and such hostile or unusual elements can easily be identified by company management. In some cases, technical help is taken by placing some hidden gadgets near the place where such cheating employee sits. These gadgets can record conversations and further establish the guilt of cheating employees. Forensic auditing and accounting also play a vital role in employee fraud investigations. Undercover investigations play a crucial role in creating employee investigations. Undercover agents are deployed in the company and disguised as company employees. They are placed in such a position that corrupt employees cannot bypass them if they want to indulge in bribery. Most of the time undercover agents are placed in security, warehouses, storekeeping, purchasing, etc., It is one of the most interesting and complicated processes of investigations. Undercover investigations need very skilled private detectives. Digital forensics is yet another area, where private detectives can work to find out a cheating employee. In digital forensics, private investigators scan the laptop and desktop used by a fraud employee to gather some proof and evidence. Private investigators also establish links with bankers to see the financial and money trail. Private investigators play a pivotal role in facilitating legal actions against cheating employees. Private detectives also establish connections with rightful company employees and interview them to get leads. Investigations in these cases can be both covert and overt. Private investigators help catch cheating and fraud employees and save the business from potential threats and risks.