Of course not! This is a great place to work; we treat employees like family and pay them well. Besides…we only hire people we trust!
Well…think again. Most fraud-related surveys (and many of them exist) find that schemes typically last multiple years before being discovered, not-for-profit and religious organizations are targeted more often than other entities, and perpetrators are long-time employees who rarely have been charged previously with fraud. To sum it up, “trustworthy” people can effectively steal from you. You watch the others carefully or make sure to limit their access to cash or other assets.
As a long-standing auditor, I confess to day-dreaming of finding fraud if it exists at my client companies. I also gravitate to crime thrillers (true and otherwise) for my escapism reading, so maybe that says more about me personally than my chosen profession. During my three decades or so as an auditor, I know of four instances of fraud at my clients – three of which we discovered while performing audit or review procedures (which is not a primary detective means, as most surveys have found). In every one of those frauds, the perpetrator was installed in a position of trust and succeeded largely because of that misplaced trust, although their means differed. Also interesting to note is that once the frauds were discovered, management was as distraught by a sense of betrayal as by the loss itself, although the loss amounts were more than incidental.
In examining 528 cases in 2012 in which at least $100,000 was misappropriated, the survey found the most common embezzlement schemes were: forged/unauthorized checks (29%); theft/conversion of cash receipts (22%); unauthorized EFTs (11%); vendor fraud (10%) and payroll fraud (8%). These five schemes also account for the most common types of embezzlement when expanding the population considered to include the most recent five years of aggregated data.
The Marquet survey also includes analyses about the characteristics of the perpetrators, the characteristics of the victim organizations, the judicial and other consequences of the crimes, and thoughts about preventative measures. Interesting reading, for sure; especially the stories of actual perpetrators (true crime). And…a good reminder that fraud can and does happen, and is often carried out by trusted employees who no one would suspect.
Now may be the time to revisit your Company’s “tone at the top” (management’s stated and modeled views about ethics and expected behavior), internal controls, and employee education about fraud (how to identify and the consequences of unacceptable actions).
Don’t leave yourself vulnerable to a potentially devastating financial and emotional loss.