Even the most loyal employee may succumb to the temptation to engage in fraud. That need for 'quick cash' could be magnified to bigger and bigger amounts if left unchecked.
Fraud hurts business because it leads to unauthorized transactions which lead to losses to business, says Fabian Kasi, Centenary Bank managing director. Fraud can be in form of embezzlement, internal theft where employees steal company assets, payoffs and kickbacks and skimming where money received is not recorded in the books.
If left to persist, fraud could also lead to loss of reputation among customers, suppliers, lenders and the authorities.
The incentive, opportunity and justification to commit fraud are what auditors call the 'triangle of fraud.' Some of the ways to curb fraud include ensuring that all requisite controls are in place and enforced and complied with. For example, password control, dual control of transactions and close supervision.
It also important to hold regular employee training sessions on security systems, as well as ensuring access control to company assets and information and also carry out random spot checks to assess risks. However, even with strong controls, fraud-prone employees can still defraud a business. The best approach is to weed them out.
Key lesson: identify risky employees.
This can be done by identifying at risk employee such as those whose spouses have lost their jobs, are gamblers or drug addicts. In event of fraud, Kasi advises that a culprit should immediately be reported to the authorities for further investigations. He adds that fraud must be stopped at once. "In our case, the bank has zero tolerance to fraud," Kasi says.
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