Ne’er-do-wells can sneak into an organisation digitally but there are times where criminals are more brash and come in through the front door.
Instances of fraud are on the increase especially in South Africa. According to PwC’s Global Economic Crime and Fraud Survey, senior management are more and more often the main perpetrators with their involvement increasing from 20 percent to 34 percent.
For course, management aren’t the only ones responsible for fraud and spotting it before it happens is vital.
“Taking preventative measures against internal fraud can seem daunting as employees occupy privileged positions of trust. With access to internal systems and knowledge of internal processes, employees know where the gaps lie in a company’s internal controls,” explains chief executive officer at eftsure Africa, Ryan Mer.
“Internal fraud is often committed by a trusted employee and can go undetected for several years. External auditors may struggle to detect financial anomalies thanks to the many subtle ways employees can secretly profit at their employer’s expense,” the CEO adds.
While every business should have fraud detection capabilities, as Mer points out, fraudsters can be difficult to catch. As eftsure Africa operates in the realm fraudsters do it has noted several red flags business owners should watch out for.
- Requesting unnecessary access to systems and sensitive information – Sensitive information should be on a need-to-know basis. A member of staff snooping in confidential company files should be questioned.
- Disorganised or incomplete record keeping – Shoddy record keeping may be a deliberate attempt to hide nefarious activity. Maintaining high administrative standards is therefore a must.
- Employee doesn’t take annual leave – A reluctance to take annual leave may be a result of a fear of being uncovered while certain duties are handled by a colleague or superior.
- Conflicts of interest with suppliers – If an employee shows undue favour towards a certain supplier, it’s worth taking a closer look to establish whether the third party involves a friend or relative of your employee.
- Living a lavish lifestyle – Extravagant purchases and a sudden, drastic change in lifestyle are obvious indicators of a financial windfall and a sign to pay closer attention without jumping to conclusions.
- Signs of financial distress – While most people who find themselves in a tough spot never turn to crime, some employees may act out of sheer desperation. Keep lines of communication open and offer assistance if possible.
- Gambling addiction – Such concerns should be handled delicately by HR.
- Being rejected for a promotion – An employee who feels they are underpaid or deserves to occupy a higher position of authority may feel justified in defrauding their employer.
- Accessing network resources after normal working hours – Insiders may attempt to access files, applications, networks or intellectual property outside normal working hours.
Looking at the above there is a clear pattern that emerges – money problems. While fraud is unacceptable, prevention requires robust policies, training and data management but perhaps employers should consider the human element as well.
Allowing employees to have an open dialogue about their financial situation in a trusted space should be factored into prevention methods. As eftsure Africa says, folks may act out of sheer desperation and with a global recession, the cost of living rising and a pandemic still sowing chaos, that may be less of an oddity.
[Image – CC 0 Pixabay]
