Employee fraud warning as cases rise

Businesses need to be vigilant following an increase in cases of ‘employee fraud.’

The warning, by Jeremy Rowe, director at Pierce Forensic, comes as fraud prevention service CIFAS publishes figures which show insider fraud levels increased 52 per cent during the first half of 2012.

The figures from the not-for-profit organisation which represents the private and public sectors show that its staff fraud database identified 289 cases of fraud committed by insiders between January and June, compared to 190 in the first period of 2011.

Now Jeremy is warning that he has advised on a number of recent cases involving the theft of takings, cash or stock by employees – something which can cause significant damage to a small business.

He highlights the economic climate as a potential cause for the increase.

Jeremy said: “It is no surprise that employee fraud is on the rise at a time when many employees are perhaps struggling financially or in difficult personal situations.

Fraud is often committed by ordinary, unassuming employees, and the fraud itself is often frighteningly simple, with little effort to cover up the stolen or diverted funds.

In my experience, fraud often succeeds because there are a lack of simple fraud prevention measures in place.

Business owners and employers need to be alert to the possible dangers and keep an eye on the day-to-day operations of the business, periodically reviewing financial records for anything unusual.

For example, one simple way fraudsters cover up their tracks is to maintain untidy or disorderly records, so this may be a sign that something is not quite right.

Reviewing the records does not have to be a time-consuming process, but acts as a good deterrent against such instances of fraud. Any business which has concerns should contact its advisors for help.”

Jeremy’s top five tips to prevent employee fraud:


  1. Periodically review financial records for unusual patterns.
  2. Hold regular meetings with financial staff.
  3. Ensure that staff are fully trained and that everyone understands their role.
  4. Make sure staff are aware of the dangers to the business of employee fraud and encourage an ‘open-door’ policy with staff.
  5. Perhaps most importantly of all where cash is involved ensure there are crosschecks and reconciliations in place and make sure they are done and reviewed on a timely basis.