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Am I a Victim of Employee Fraud?

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Am I a Victim of Employee Fraud?

Employee fraud is a growing concern for businesses across Canada, costing companies hundreds of millions of dollars each year. The impact of employee fraud can be devastating, and some businesses have even been forced to close their doors due to the actions of deceptive employees. To protect your business and financial interests, it’s crucial to be vigilant and aware of the red flags that may indicate employee fraud. In this blog, we will delve deeper into the signs of employee fraud and provide essential tips to help you avoid falling victim to it.

1. Works Outside of Business Hours

One of the early signs of potential employee fraud is when an employee consistently goes above and beyond by working extra hours, either arriving at the workplace exceptionally early or staying late. While dedication and commitment to one’s job are commendable, it’s essential to investigate when an employee frequently insists on being in the office alone, especially if their role grants them access to the company’s funds.

2. Refuses Access to Records

Another alarming sign to watch for is when accounting files, which were previously accessible, suddenly become encrypted or restricted. If an employee begins denying access to accounting records or puts up barriers to prevent oversight, it’s a clear cause for concern. The inability to access essential financial information could indicate attempts to conceal fraudulent activities.

3. Private Meetings

Pay attention to employees who frequently arrange private meetings with specific vendors or suppliers. While building professional relationships with vendors is common, excessive private interactions may raise suspicions. Special relationships with vendors could imply hidden agendas or undisclosed agreements that could harm your business.

4. Inconsistent Purchases with Salary

If you notice an employee living a lifestyle that appears inconsistent with their salary, it’s essential to investigate further. For instance, if an entry-level accounting employee suddenly drives a high-end vehicle or purchases a new home well beyond their means, it may signal that their income is not solely derived from their legitimate employment. Such discrepancies should prompt questions about the source of their newfound wealth.

5. Changes to Vendor Invoices

Examining your accounts payable and receivables can reveal potential signs of embezzlement or money laundering. Be vigilant for invoices that display significant discrepancies from the amounts paid out or that vary significantly from the initially quoted amounts. Such irregularities may indicate attempts to manipulate financial records for personal gain.

6. Missing Information

Anomalies in vendor contact information or omitted details regarding goods or services should raise suspicion. Review your cheque books to ensure there are no missing cheques. If any are found, it’s crucial to determine the payee and match it to a specific invoice. Unexplained missing cheques could be a telltale sign of fraudulent activity.

7. Increase in Write-Offs

An unusual surge in write-offs can be indicative of embezzlement. In such cases, an employee may pocket the money and then write it off as unpaid or as a debt within the company’s financial records. Monitoring write-offs closely can help uncover potential fraudulent activities.

Protecting Your Business from Employee Fraud

Preventing employee fraud requires proactive measures and a commitment to maintaining the integrity of your organization. 

Here are some essential steps to safeguard your business:

  1. Implement Strict Financial Controls: Establish robust financial controls and procedures to prevent unauthorized access to sensitive financial information.
  2. Regularly Review Financial Records: Routinely review your company’s financial records and accounts payable/receivables for irregularities.
  3. Conduct Background Checks: Screen potential employees thoroughly, particularly those in roles with financial responsibilities.
  4. Promote a Culture of Transparency: Encourage employees to report any suspicious activities or concerns, and provide a safe and anonymous reporting mechanism.
  5. Hire a Professional Investigator: If you suspect employee fraud, seek the assistance of a professional investigator with experience in uncovering fraudulent activities.

Employee fraud can have severe consequences for businesses, ranging from financial losses to damage to reputation and trust. By remaining vigilant and addressing potential red flags promptly, you can protect your business from falling victim to fraudulent activities. If you suspect that an employee is embezzling funds or engaging in criminal activity, don’t hesitate to contact The Smith Investigation Agency Inc.. Our experienced team of investigators can help you uncover the truth and take appropriate action to protect your business interests.

About the Author

Whitney Joy Smith

Whitney Joy Smith is a prominent figure in the field of private investigation and security, serving as the founder and CEO of The Smith Investigation Agency Inc., Smith Security Inc., and Training Centre Canada, as well as a sitting politician.

With a remarkable journey that began in the early 2000s, Whitney's professional background as a private investigator is underscored by her unwavering dedication to the role. Born in Canada and having spent her early years between Canada and the United States, Whitney possesses a unique perspective shaped by her experiences in both countries. This background equips her with an in-depth understanding of the intricacies of private investigative laws, regulations, and operational standards in North America.

Throughout her career, Whitney has garnered numerous industry awards and accolades. She takes great pride in working closely with her continually expanding agency, striving to elevate industry standards, maintain compliance, and effectively meet the diverse investigative needs of clients.

Whitney actively engages in various membership, committee, board and support roles, demonstrating her commitment to the industry and professional community. She is affiliated with all local chambers, associations and more.

Whitney's wealth of experience is not limited to her professional achievements; her thought-provoking articles have been featured in publications ranging from Readers Digest, Cosmopolitan, Huffington Post, and Mens Health to Business News Daily. She constantly seeks to redefine standards and push the boundaries of excellence within the private investigative and security fields.

To discover more about Whitney Joy Smith and the dedicated team at The Smith Investigation Agency Inc., visit our website to learn more.

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