Workplace Fraud
Fraud occurs when there is/are:
- Incentives and pressures
- Opportunities
- Rationalization
- Collusion between employees
- Long tenures contributing to the abuse of trust
- Lack of written policies and procedures
- Lack of training
- Lack of financial oversight
- Overriding of controls by higher level of authority
- Insufficent staffing which can result in rubber stamping and improper segregation of duties
Common fraud schemes:
- Misuse of procurement cards (P-cards)
- Padding expense accounts
- Listing ficticious vendors
- Rigging vendor bids
- Taking kickbacks
- Abusing payroll and overtime by fraudulent reporting of work hours
How to reduce fraud:
- Clearly written policies and procedures
- Requiring employees to attend job related training, including ethics, so they fully understand the rules and what constitutes fraud (many do not)
- Clear communication of zero tolerance
- Promoting whistleblower hotline
- Paying attention to small transgressions - fraud generally starts small and can grow over time; addressing the smallest transgression is instrumental in preventing future scandals.
- Focusing on preventative action rather than reactive action; losses are difficult to recoup
Source: R. Schwartz, M. Larson and M. Kranacher (2008). Helping to Prevent University Fraud. Deloitte Forensic Center.