Employee Fraud – Behavioral Signs and Indications

Employers often ask whether there are any signs to look for or other indications of fraud being perpetrated by their employees. Following are a few examples of things to look for:

  • The employee has a sudden need for cash. Employees who are basically honest and who would normally not even consider stealing from their employer may have a change of heart when confronted with a sudden need for cash. For instance, the employee’s spouse suddenly loses his/her job or has a drastic reduction in compensation. Or, a child or parent becomes seriously ill or injured and there is a need for expensive medical treatment. A sudden change of circumstance often provides motivation for a change in behavior.
  • An employee is living above his/her means. Is someone taking expensive trips, driving a luxury car or investing in a vacation home that the person’s income does not seem to allow? It may be that the employee has discovered a supplemental source of income within the organization.
  • The employee is so hard working and dedicated that he/she never finds time to take a vacation. Employers often marvel at the work ethic of some of their long-time employees who would rather work overtime than take a day off. Sometimes, this attitude results not from a strong work ethic, but from a need to maintain a lapping or kiting scheme or some other deception that requires the person to be at work every day to avoid discovery. Mandatory vacation, with another employee temporarily taking over the vacationing employee’s duties, is a prudent requirement.
  • The person’s attitude toward the employer has changed. Sometimes a contented worker becomes disgruntled and openly critical of the employer when passed over for a promotion or given a raise in pay that is less than expected. The situation becomes particularly intense when the person feels that everyone else has been treated fairly while they have not. The formerly contented employee now feels a motivation to “even things up”.
  • The employee’s explanations are odd or unreasonable. When questioned on a matter, employees sometimes provide explanations that either do not make any sense or, in the extreme, could not possibly be correct. This may be a sign that the employee is covering something up and needs to delay further inquiries until the cover up is finished.
  • The employee overreacts to questions. When a simple question elicits crying, complaints about being overworked, or stammering, it may be a sign that the employee would prefer not to give a truthful answer to the question. Overreaction may cause the employer or supervisor to back off and let the person recover their composure. This is what the dishonest employee is hoping for. And, it is even better for the dishonest employee if the question is not repeated.

Any of these situations can occur in normally and do not necessarily mean that a fraud is being committed. However, the employer and supervisor should be alert to their occurrence as possible signs of fraud.

If you have any questions or concerns around fraud and your business, fill in the form below and a member of our team will be in touch.

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