Recession fears lead mid-level employees to be more likely to press their luck with skimming a little off the top. Believe it or not, that may be good news.
When occurrences of fraud come from this particular avenue, there are plenty of steps a company can take to keep its finances protected:
- Conduct seminars. The benefits of educating employees about fraud are two-fold: Not only does it instruct employees what to do if they come across evidence of tampering, but an in-depth course on prevention also dissuades individuals from trying anything in the first place.
- Install a tip line. Depending on the situation, whistleblowers might not want to come forward unless they’re completely sure they’ve seen fraud — and by then, the damage could already be severe. An anonymous tip line encourages employees to report whatever they see as soon as they see it.
- Pull credit reports on employees. Observing employees’ spending habits as compared to their income can give companies a primer on who’s most strapped for cash.
- Divvy up the responsibilities. Giving fraud-sensitive duties to the most responsible and skilled employees might make sense, but it also increases a company’s risk of attempted wrong-doing. Separating check-writing and reconciliation duties among different employees keeps a system of checks and balances running.
- Avoid budgets. They may seem like a smart place to hide excessive spending, but it’s too difficult to sniff out fraud by comparing budgets. They can inflate. One year’s padded T&E spend could be the norm for the following year.
- Surprise! Nothing keeps security tighter than surprise audits. Whether it’s an internal committee or a third party, audits pick up on fraud earlier and square things away for next time.
- Remember Benford’s Law. This “first-digit law” says that in lists of numbers, odds are good that the first digit will always be 1. The larger a digit is, the less likely it is to appear as a leading digit. It doesn’t always point to fraud, but it helps in spotting anomalies, whether in check numbers, payroll statements, vendor addresses, etc.