Marks of a fraudster: Do your staffers exhibit any of these red flags?
March 9, 2010 by Jared BilskiPosted in: Benchmarking, Communication tips, Fraud prevention, In this week's e-newsletter, Internal controls, Latest news & views, Management issues
Here’s a sobering stat: The average case of employee fraud goes on for two years before the victimized employer catches wind of it.
That’s what the Texas-based anti-fraud trade group, Certified Fraud Examiners, has found.
So, while you want to believe none of your employees would stoop low enough to steal, you want to stay vigilant should any of these red flags turn up.
Here are two common signs that fraudulent employees frequently exhibit:
1. Their numbers are off. If something strikes you as even a little odd with an employee’s time sheet, expense report, etc., it’s worth it to investigate. For example: When a manager at an Iowa-based company noticed that one subordinate handed in a time card for more hours worked than were physically possible, she could’ve written off the incident as a simple mistake. Instead, however, she did a little digging and found out that the employee had been extending his actual hours for months.
To prevent this problem in the future, all supervisors at the company are now required to review — and sign — employees time-cards before they can be processed.
2. They complain about money on a regular basis. According to the ACFE, many cases of employee fraud are caused by financial pressure. It’s a good idea for managers to keep tabs on employees who do an inordinate amount of complaining when it comes to their personal finances. And, if the complaints from a normally vocal complainer suddenly stop without warning, there may be good reason to be suspicious.
Has your firm ever been a victim of employee fraud? What safeguards do you have in place to prevent it in the future? Share your tactics with us in the Comments section.
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Tags: ACFE, Anti-fraud trade group, Certified Fraud Examiners, Employee fraud, Fraudster, Personal finances, Red flags
March 15th, 2010 at 5:22 pm
We have an ee whose co-workers are all claiming she’s defrauding her timesheets for lunch hours. Her supervisor seems unwilling to investigate or give any credance to these claims, even when I, the HR Manager have seen similar time irregularities. He even goes as far as defending the employee. We’re (the staff) are unsure what to do to get the supervisor’s attention to this matter. Any advice would be much appreciated.
March 15th, 2010 at 5:29 pm
To JM:
As a fellow HR professional, wouldn’t the supervisor’s failure to investigation be misconduct? If the supervisor is failing to do their job, perhaps their supervisor needs to discipline them so they get the message. I would question what the relationship is between the two that the supervisor is choosing not to listen to all the evidence and giving favortism instead.
good luck
March 15th, 2010 at 8:34 pm
It’s the manager’s job to enforce the companies’ time/recordkeeping practices. Hold the manager accountable for the matter or it will ultimately be his job….and HR is they don’t reign it in.
March 16th, 2010 at 7:23 am
We had that exact same problem. How weird. We put in a computerized payroll software that they have to log onto when they arrive at their desk and punch a clock in button. We all have a unique ID and Password to log onto the system and the employees cannot make changes to their own timesheets. Only a Supervisor can do that. Now that person arrives 15 minutes early for work everyday.
March 16th, 2010 at 7:41 am
Did I see that stated correctly – You’re the HR Mgr and you’re asking for advice?
PS – Keep your eyes on both of them and document everythng!
March 16th, 2010 at 8:42 am
Suggestions -
1) Dig out your company policies. What do you have about recording of time? Do you have an ethics policy?
2) You, the supervisor, and possibly the supervisor’s supervisor should have a face-to-face meeting. Find out why he is not giving this issue the proper attention. (Could there be a possible relationship between the supervisor and employee that is clouding his judgement?)
3) Follow Karyn’s advice with diligence >> Document – Document – Document. This is very important initially for the employee and his/her timesheet irregularities. However, the supervisor’s actions or inactions have now brought this issue to a new level. You need to document your meeting with the supervisor and the outcome should corrective (and possible termination) action with the supervisor become necessary in the future.
4) Do you have an internal audit staff? If you do, you may want to discuss this with your Director of Internal Audit to see if this area (timekeeping) is in his/her target area for this year. Get his/her opinion of the matter. My concern as an auditor is the possibility of collusion between employee and supervisor. What does the employee have access to that the supervisor, if in collusion with the employee, could approve that would be costly or detrimental to the company?
Good luck.
March 16th, 2010 at 3:24 pm
Thanks for the input and advice everyone. One detail I didn’t mention above, is that the supervisor (Controller) is also my boss. The owner is above the Controller, and it has been made very clear that I am to got to my boss with everything. It’s a very sticky situation, and I am absolutely documenting complaints, and discussions with my boss. Should things continue, I’ll go over his head and deal with the consequences, but I don’t have enough “proof” at this time to make the risk worth it. Again, thanks for your advice.
March 16th, 2010 at 3:33 pm
You definately need to watch them. Either there’s a little “somethin somethin” going on between them or they are friends. Maybe they have a long term working relationship, or they go to church together or their kids are friends or something.
I would keep a note of all discrepancies and log all conversations with your boss. If it gets put to you to “don’t worry about it”. Then you need to meet with the CEO and explain that you were put in your position for a reason and that you would be lagging in doing your job if you didn’t report “time theft”. If he doesn’t do something about it then, I would start worrying about the company I was working for because they obviously don’t value the company’s other employees that are being honest. You might want to start putting out feelers for another job as the economy improves.