Today, fraudulent activity is widespread and well-practiced, and it could legitimately be committed by anyone. Unfortunately, in our eagerness to be aware of external threats, many people often overlook fraudsters within our own organisations, who leverage interpersonal relationships (and other means) to avoid suspicion. Here are 7 ways you can spot internal fraud within your business:
1. Staying late and working overtime, or on weekends.
A fraudster will welcome the opportunity to not be overlooked while they work.
2. Spending beyond their means.
Buying fancy watches, luxury holidays and expensive cars are classic indicators. However, people have become smarter around hiding this and may be investing in cryptocurrency, businesses, or property instead. Be aware of any staff sinking large amounts of money into any of these.
3. Not taking annual leave.
Often wary of keeping their dealings to themselves, people who commit fraud don’t like to share their workload – just in case their ruse gets uncovered.
4. Over-ordering of goods.
This can be a sign that some of these goods are siphoned off at some point for resale on their own terms (and prices!). Continuous monitoring and checks against your invoices, statements and goods in notes are essential here.
5. High expenses claims, especially in gifts and hospitality.
This could be a sign that someone is buying non-expensible items for themselves, so thoroughly checking what they’re claiming is important.
6. A new employee, a contractor or on a short term contract.
Organised crime groups are now targeting and entering organisations as employees, specifically to harvest data. Therefore new employees on a short-term contract, or yet to complete their probationary period, could be a higher risk.
7. Employees with personal struggles.
Money troubles stemming from separation, another child on the way, a partner being made redundant and more can create the motivation to commit fraud if the opportunity exists.
As always, context is important when considering these indicators – they are not, by themselves, definitive proof. If you’re interested in hearing more about insider fraud and signs to spot, with further context and real life examples, watch our webinar – “Fraud: The Threat From Within” with Robert Brooker, Head of Fraud and Forensics at PKF.