Detecting Employee Fraud

Many business managers think that employee expense claims represent a small percentage of their total spend and believe that there is only a small risk to their business. However on closer examination, many businesses find that over 10% of their total expenditure is processed through employee reimbursements and some employees are being reimbursed more than $10,000 per month.

For setting up a good plan, you can do the following steps:

1. No matter how much you suspect one, do not accuse without sufficient evidence. Do not even mention to anyone that a employee in your company has done something. Because then you may be sued for slander. Try to collect evidences first. If you are not getting what to do, consider going to an attorney who is specialized in employee cases.

2. Start a thorough investigation. If necessary,hire a forensic accountant. But remember, this investigation needs to be in such a manner that none your employees know about it. If that is not possible, tell the employees that you are looking for some specific data and would appreciate help where needed.

3. Remember, you can suspect an employee. You can even have strong belief that this is the one who is doing all the fraud stuffs.But suspicion and belief are not the facts. You need to have hard evidences. If you have witnesses, it will strengthen your doubt. But you will not credible witnesses. If possible, try to collect specific documents and video tape against the suspect.

4. During all the conversations, have a management witness present that you have with one of the employees.

5. If you have sufficient evidences against the suspected employee, but the investigation is not complete, do not fire that employee. Place that employee in leave, paid or unpaid. After the investigation is completed, make your fire or retain decision.

6. Do not detain the suspect. If the suspect refuses to cooperate or talk and take an attempt to leave, simply tell that if he or she does not give information, you will be forced to take a decision without he benefit of the employee’s input.

7. The most important thing is the documents. Prepare as many documents as possible. Write down anything you find, any odd behavior and movement of the suspect, etc. Remember, all these things can make the difference in the end.

Whilst it is a relatively straight forward process to detect employee expense fraud, organisations need to ensure that their policies and procedures comply with relevant statutory and common law requirements. We recommend that a Workplace Relations Specialist is consulted from the outset. We also recommend that organisations implement a process to ensure that fraudulent claims are recovered from the individuals concerned.