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.

 

Page Updated 11.08.2013