Employee Fraud

Frauds made by employees in businesses can take many forms. An employee can directly embezzle and steal any value belonging to the business, or indirectly, by using third parties. Here, more important than how the transaction is carried out directly or indirectly, is that the business suffers a loss in every case.

In recent years, the increasing incidence of employee fraud has attracted the attention of internal auditors, business owners and shareholders. Employee fraud has and continues to have significant economic and social consequences. In a study, it was seen that poor justice practices negatively effect of the employee and this results on directly or indirectly fraud.

Employee frauds; embezzlement of collections without recording, theft of physical checks, benefit by changing bank records, stealing money from the business by inflating expenses, showing fake payments and collections, stealing goods from stock, inflating expenses, providing benefits by ordering extra products that are not needed etc.

Examples include cash thefts, payroll frauds, embezzled money, and irregularities in bank records, stealing or using business assets for personal purposes, and inflating travel expenses from the company.

One of the biggest reasons, which leads fraudsters committing fraud, is the opportunity. Others are as follows:

• Weak ethical policies,
• Collusion with third parties,
• Inadequate disciplinary practices,
• Weak information flow among employees,
• Ignorance and incompetence of the top management,
• Complexity in the organizational structure of the enterprise,
• Inadequacy of internal auditors,
• Excessive time-consuming business assets
• Frequent personnel changes in top managers.

A strong internal control, adoption of the principle of segregation of duties, moral and ethical measures, effective and efficient authority sharing and assignment, electronic monitoring of business processes, e-invoice and e-ledger are among the primary measures to prevent employee fraud in order to protect the assets of the enterprise. In addition, the internal control structure and its employees should constantly update itself in the light of changing legislation and developing technology, and form new policies in this direction.