Fraud Suspected in the Workplace? Employers, You Better Read This – Part Two

Kelly Todd

By Kelly Todd

When you think of fraud within an organization, a newer employee may be top-of-mind, but according to the Association of Certified Fraud Examiners (ACFE), seven percent of perpetrators committed fraud during their first year and more than 53 percent had been with their organization for more than five years.

In my last blog post, I discussed the prevalence of fraud within organizations, costs associated and also provided a few tips to consider immediately after suspecting fraud in the workplace. In this post, I will continue the discussion of best practices, should you have an incidence of internal fraud.

Deal with the Suspected Employee

Naturally, your immediate impulse will be to fire the employee, but acting on this rash impulse could be the worst decision possible and could hinder the investigation. Employees have a duty to cooperate with employers during a lawful investigation, so consider keeping them on your payroll—no matter how hard it might be to keep them around or look them in the eye. Not terminating the suspected wrong-doer can make obtaining records and/or interviews exponentially easier. Once they are no longer employed by you, the chances of gathering information from them becomes a much more challenging process.

Restrict Access

Once the employee has been informed that they are the subject of an internal investigation, immediately restrict them from touching or removing anything from their office except personal items. Any time the alleged perpetrator is on the premises, they should be accompanied and watched closely, then escorted from the office.

The suspected employee must be restricted electronically, as well. Deactivate passwords in order to deny access to company information systems—often, the most dangerous cyber threats do not come from outside the organization, but from within—the company’s own employees. A resentful employee who knows that they are the subject of an investigation has the potential to cause chaos throughout various information systems within milliseconds. If their access is not restricted, they could potentially cover their tracks, encrypt programs to render them useless, steal confidential information or delete incriminating evidence.

Contact Your Insurer

Ensure you contact your insurance provider early on in the investigation—failing to notify your insurer can void coverage, making your losses even greater. The majority of policies have a 30 or 60-day notification provision, beginning from the first day you discover a loss possibly occurred.

Once you have notified your insurance carrier, you will likely have to file a proof of loss within a specific time frame—a time frame that is often too short to efficiently and effectively document a claim. Be sure to ask your insurer if they will grant you an extension to file your proof of loss in order to have adequate time to properly document your claim.

Internal fraud investigations are a lengthy and complicated process, and will sometimes prove unrewarding. Enacting each step I have listed will increase your chances of making a full recovery and will help the investigation move as smoothly as possible.