Managing and Preventing Employee Fraud (Part 2 of 2)


Revisit Your Hiring Process

First and foremost, criminal record checks should be a legal hiring requirement for all new hires as well as your current employees. However, keep in mind that nearly two-thirds of offenders are not prosecuted; therefore, their next employer may be unable to learn of their previous offenses.

It would also be prudent to undertake a thorough reference checking process, and if legally appropriate, include credit checks as well.

Contemplate Surprise Audits and Training

Employees should know that impromptu audits are likely to occur, however, they should not know what data will be under review. These audits do not need to be top-to-bottom reviews of the firm’s finances; instead, they need to target specific areas.

Additionally, overlapping financial records should be reconciled sporadically. As an example, compare receipts that are recorded in the billing system to revenues recorded in the accounting system, then cross-check those numbers with your bank deposits. Make certain someone other than the employee who prepares the records conducts the reconciliation.

Lastly, you may want to consider restricting employee computer access to only those computers, programs, and the electronic data required to perform their jobs efficiently.

Educate your staff about what constitutes fraudulent, illegal and unethical actions; their role in preventing and deterring fraud; and how to recognize the signs of prohibited behavior. Doing so will make them more likely to note suspicious behavior, and weaken their ability to defend themselves if they are caught in the act of defrauding the firm.


Supporting Article Research Sources:, Ostrow, Reisin, Berk & Abrams Ltd.