We continue our discussion of certain employee behaviors at work that might signal a potential for fraud.
Chronic dissatisfaction with one’s position, duties,
co-workers, or supervisors is also cause for concern. Employees who are
generally unhappy at work or who feel unfairly treated can more easily justify
stealing from the company. They might feel that the company or the department
of the manager “deserves” to become a victim of fraud. Equally as plausible is
the employee who believes it is okay to steal to settle a score or supplement a
perceived pay imbalance. A dissatisfied or disgruntled employee is more likely
to rationalize a fraud as payback to the company.
Look for unusual behaviors at work. Most commonly, a sudden and significant
change in behavior can signal a problem. For example, an employee who is
usually cheerful and on time may suddenly start showing up late and seem
unhappy. This doesn’t necessarily indicate fraud, but it might point to
personal problems that could indirectly influence an employee theft. It just
might point to lifestyle issues that management should be aware of, so they can
monitor the employee more closely.
Other unusual behaviors include always being the first employee in or the
last one out. An employee who looks for an excuse to linger at work in
order to be alone could pose a problem. Similarly, the employee who never
takes a vacation may be a problem. Companies have uncovered many frauds
when employees who were regularly on the job had an unexpected illness or
unexpected absence. It is during such an absence or vacation that fraud can be
uncovered, because the employee is not there to cover all bases. Thus, someone
who doesn’t want to take time off may be covering up a fraud scheme.
One work activity often overlooked when considering the issue of fraud is a manager
who does subordinate-level work. While it be okay for a supervisor or other
manager to temporarily “fill in” for an absent employee or a vacant position,
it is not reasonable for this to go on long-term. Doing these subordinate-level
duties for an extended period of time may indicate a manager who is engaging in
a fraud scheme and maintaining control of the lower level tasks in order to
cover the fraud.
Generally, owners and executives looking for fraud should be aware that
employees are familiar with the company’s operations. Like it or not, they can
easily come up with ways to cover a fraud, especially if the employee is in a
position of trust. It’s critical to note that employees are not necessarily
above testing the system. They may try a small fraud that could easily be
explained as an error or anomaly, and if it is not discovered, the employee has
the green light to try something a little bigger.
The nature of business and the trust we must put in employees leaves companies
vulnerable to fraud, even with the best internal controls. But being aware of
unusual behaviors on the part of employees can help owners and executives spot
fraud a little earlier and hopefully limit the company’s losses.