Don't Be A Fraud Victim At Your Work

Posted by Amanda Nieweler

on September 23, 2016

blog_fraudtriangleOne-third of BC companies have reported being a victim of fraud. Yours doesn’t need to be the next one!

The fraud triangle originated from Donald Cressey’s hypothesis:

Trusted persons become trust violators when they conceive of themselves as having a financial problem which is non-shareable, are aware this problem can be secretly resolved by violation of the position of financial trust, and are able to apply to their own conduct in that situation verbalizations which enable them to adjust their conceptions of themselves as trusted persons with their conceptions of themselves as users of the entrusted funds or property. source ACFE.com

The fraud triangle consists of three triangles.

  • Perceived unshareable financial need – some sort of pressure or motive to commit fraud, such as needing money
  • Perceived opportunity – due to lack of controls or oversight
  • Rationalization – fraudsters believe the company is big enough and they don’t get paid enough

How well do you know your employees and outside contractors? Do they never take vacation? Are they always working late? Do they refuse to allow anybody to cover work for them? Are they living outside their means? Chances are if these things are happening, there may be fraud happening in the company. It’s best to do background checks on all employees and contractors, then get to know them a little.

For important matters like finances, one person should not be holding all the cards. The same person should not be allowed to set up accounts for new vendors and issue checks at the same time to those vendors. This is where phantom vendors can pop up, and the check ends up in the hands of the person who issued it. As well, not all employees need access to the accounting and finance server.

It’s important that management keep somewhat of a hands-on control of their departments and know exactly what is going on. Managers should review new vendors, or double check the accounting and financials. Any anomalies may be found earlier, preventing something that could turn bigger.

According to the ACFE, more fraud is uncovered by anonymous tips. One of the most important things companies can do is to implement an anonymous fraud intake hotline. Having an open and ‘speak-up’ culture in the workplace where any concerns can be expressed makes for a healthy workplace.

There are many ways you can prevent your business from being the next victim of fraud.

eBook: 7 Reasons to Implement a Whistleblower Hotline