Are you turning a blind eye to employee fraud?

In this two minute HR blast the information comes to you courtesy of one of the Jaluch Partners, Andy Mileham, who owns private investigative agency Aston Covert.

A recent report by CIFAS claims that fraud by insiders (including employees) rose by more than 40% last year.

Often when you talk to businesses (HR departments) and ask about fraud they say it’s not a problem but should it happen, they will deal with it internally. This is when alarm bells start to ring.

The reality is that most organisations have absolutely no awareness of employee fraud and what it could be costing them. Organisations should start with a basic self audit such as:

Where might fraud be occurring in the organisation?

  • Theft of time – malingering, days off ‘sick’ and non existent external appointments
  • Theft of items – office equipment, laptops, cables, stationery and office furniture
  • Theft of data – customer lists, supplier lists, payment details, business strategy
  • Theft of knowledge – IP/Copyright information
  • Theft of cash and stock e.g. expenses fraud, false accounting, petty cash box raids, stock theft

Who poses the greatest threat to the organisation in respect of risk?

  • Specific departments
  • Those handling cash
  • Those with access to bank accounts
  • Those who travel regularly on business
  • Home and remote workers
  • Senior managers
  • Directors
  • New staff
  • Those with out of hours access to property and equipment
  • Staff undergoing performance or disciplinary action

What is the company’s view of fraud?

  • Always acceptable and not worth the hassle of managing it
  • Sometimes acceptable
  • Never acceptable
  • Are different standards of acceptance linked to different types of fraud?
  • Is theft of time accepted and expected whereas theft of cash and stock is never expected or accepted?
  • Are you comfortable with different standards within the business if that is what you believe you have?


Just to challenge you a little, on a scale of 1-10 how much do you trust your staff to each and every day act with integrity and honesty?

Thinking of the score you have just given your staff, do you think that this score is honest and true or hand on heart do you perhaps think it is more wishful thinking?

The tipping point

Now you have thought a little about fraud and trust, let us ask you where you think the tipping point is for your business.

  • If an employee stole £10,000 would that be detrimental to business continuity or profitability?
  • If an employee stole £100,000 would that be your tipping point?
  • Perhaps in your business it’s a million or more.

Why not ask your directors what they would consider the financial tipping point to be. What is the greatest level of fraud they think the business could sustain and then consider how you safeguard against that.

But moving on to time theft or IP theft, where is your tipping point here? Does time theft just undermine your profitability or does there come a point at which it impacts business continuity or profitability. And the same for IP theft. Could you just shrug your shoulders if your key IP is stolen or would this be a tipping point for your business?

Business protection

To protect your organisation there are things you can do. Here are some of our ideas:

Audit and checking

  • Using some of our thoughts in this HR Blast, do a Fraud Exposure Audit for your business – or perhaps even just departments within it. Work out your priorities for protecting your business. Where are the greatest risks and who poses the greatest risks. (And remember that in the UK the majority of serious fraud is committed by the most senior staff!)
  • Consider whether any CCTV is required in areas where cash is handled or sensitive data is stored.
  • Introduce a system of spot checks within the business – spot checks on things such as websites visited, use of work computers, expenses claims, equipment issuing, business credit card use, one day absences etc.

Taking action

  • Stamp out any practices of employee fraud where employees are not even aware that what they are doing is fraud – e.g. petty theft of stationery, sickie days, putting things on expenses that should not be claimed as business expenses etc.
  • When you suspect an employee of wrongdoing, do not feel you can take no action as you have no proof, but instead engage a business such as Aston Covert so that you can understand what you are actually dealing with. You might find that having an investigator for just one day on the trail of your way ward employee could give you all the information you need to start managing the situation.
  • Review and resend your employee fraud policy to staff once a year to ensure it remains at the forefront of minds.

If you have any questions about audits, investigations, disciplinaries or dismissals please do contact us at Jaluch. Or for the hire of a private investigator who we are very happy to recommend, please contact Andy at Aston Covert.

We have also designed and pre-prepared a training course on Managing Discipline and Dismissals. Which you can pick up and deliver in house without the need for external trainers.

The information contained within this article is for general guidance only and represents our understanding of employment and associated law and employee relations issues as at the date of publication. Jaluch Limited, or any of its directors or employees, cannot be held responsible for any action or inaction taken in reliance upon the contents. Specific advice should be sought on all individuals matters.

to top button