While office-generated fraud potentially can incur huge losses, the same opportunities for creating the transactions also enables the employee to cover their tracks: time alone and access.
We worked with two community clubs who suspected they had a theft problem. Indeed, the volunteer bookkeeper had stolen more than the equivalent of twenty-four percent of the clubs operating budget in a variety of frauds and outright thefts.
A rural municipality had a CAO who pilfered over $370,000 in two years, largely because she had no competent oversight.
Both had left significant tracks that should have alerted their superiors to problems, but neither had the appropriate knowledge or skillset.
Office employees often deal with high dollar amounts and a one-or-two percent of total sales fraud may amount to tens of thousands of dollars. Therefore, office employees should be subjected to an enhanced amount of scrutiny.
Offices may be dedicated, standalone offices or offices within any business type. They may also include satellite and remote, or work-from-home offices. All have significant risk of loss attached without proper monitoring. Each business type has unique risks and associated indicators of loss attached to them that are too numerous to list in this guide.
Personal possessions at workstation
This practice allows business records, items or money to be secreted in the purse, bag or knapsack.
Taking work home
Allowing an employee to take work home may seem beneficial to the company, but it allows the worker to stash records, equipment and company data at home for personal or resale use. Note the employee who prefers to take work home rather than work in the office, even though they may attend full-time in the office.
System passwords
Passwords should be changed regularly, but employers should always be aware of those passwords. Make sure that no sub-items or files are password-protected with passwords that the employer does not have access to.
Shared access projects
Be aware of any projects where employees or other people who do not need to be included in that specific project are authorized. This includes collaborative projects such as Microsoft meeting, Excel or Word, and related project software.
Remote access of data
Check for access of files by employees or non-employees from remote locations. Set up keystroke loggers and other monitoring systems. Be particularly aware of unexplained or unnecessary systems access.
Reluctance to update software used for recordkeeping
Employees that are reluctant to update software to newer versions frequently have established and capitalized on vulnerabilities in the old program and do not want to lose that access.
Working outside regular hours
Staff who prefer to work outside regular hours often do so because they are working on personal projects or need access during quiet times to manipulate, commit fraud or steal. This is similar to the employee who wants to take work home.
Reluctance to take time off or let others access work while away
This is a particular vulnerability for payroll personnel or accounts receivable/payable staff. These employees sometimes have specific methods of recording transactions and committing fraud and are fearful of having someone discover their tracks.
High departmental expenses
Watch for patterns of higher-than-usual expenses in such areas as maintenance, fuel costs, vehicle repairs, on-call trades, cleaning, office supplies and other replenishable expenses. This is an easy area to create false invoicing or divert assets to personal use.
Payroll & Wages
We investigated one employee who increased her own salary by 10% each year, in addition to that authorized by her employer. Upon further investigation, we discovered she also had padded friends’ wages by smaller amounts. Watch payroll transactions year-over-year to note unusual benefits paid out or salary variations.