Are Your Employees Stealing Time? |
One out of four shift workers admit to reporting more hours than they work and they inflate their shifts over 75% of the time, according to a study by Software Advice.
This could have a huge impact on your company's bottom line. According to the American Payroll Association, time theft can cost companies up to 7% of their gross annual payroll.
The most common types of time theft involve recording inaccurate time, time spent on personal activities, taking frequent breaks and 'buddy punching,' where an employee gets clocked in by someone else.
Here are some ways to decrease or eliminate this type of fraud:
- Create a policy that holds employees accountable
- Require a password to access your time-tracking system
- Establish a zero-tolerance policy
- Use biometric time clocks
- Implement GPS tracking and geofencing
- Improve your company culture
~ John Capizzi, Principal, IAS
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Background Checks Are an Essential Tool in Fighting Fraud
Red Flags of Fraud
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Background investigations and reference checks are invaluable tools in obtaining information about potential employees. In addition to identifying qualified candidates, they can reduce theft, embezzlement and other crimes.
“They are one of the most cost-effective and valuable tools to prevent those who have been charged or convicted of a financial crime from eyeing your business as their next target,” says Marcum LLP’s Frank Suponcic.
A failure to conduct background checks can lead to financial, legal and criminal complications for your company.
Of the victim organizations in ACFE’s 2020 Report to the Nations, 48% did not conduct a background check of the perpetrator. Of the 52% that did, 13% uncovered a red flag in the fraudster’s background and hired them anyway.
A common mistake some employers make, says Suponcic, “is in failing to perform background checks on temporary employees and on-site contractors who may have access to assets, inventory, or sensitive and proprietary information.”
While background checks can weed out some unsavory characters, don’t rely on them as your only defense against fraud. Instead, include them as part of a strong system of internal controls.
Check out 23 Red Flags of Fraud to learn about other areas where your business may be vulnerable to fraud.
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How Fraud Hotlines
Save Time and Money
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Maintaining a hotline or reporting mechanism speeds fraud detection and reduces losses. In fact, median losses at companies with hotlines are nearly half that of companies without them, according to ACFE’s 2020 Report to the Nations.
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When organizations provide fraud awareness training to employees, they are more likely to gather tips through formal reporting mechanisms (56% for those with training vs. 37% for those without it.) They are also more likely to detect fraud via tip (48% with training vs. 36% without it.)
Since 2010 the use of hotlines has increased from 41% to 49%.
While the use of telephone hotlines and mailed letters or forms has dropped over the last five years, web-based mechanisms have grown significantly.
Knowing how whistleblowers tend to report fraud can help you answer three questions:
- Who should be trained to handle a complaint?
- How likely are whistleblowers to report outside the organization?
- How should complaints lodged outside a formal mechanism be recorded and escalated?
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What's the Difference Between a Forensic Accountant and a Forensic Fraud Examiner?
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We're often asked, "What's the difference between a forensic accountant and a forensic fraud examiner?" Simply, the accountant can reconstruct the books and records within a suspected fraud while the examiner can prove or disprove whether a fraud occurred.
The accountant analyzes fraud documents to calculate losses and investigates incidents of financial fraud
The examiner reviews financial data, transactions, records, statements and other records for fraud. They interview witnesses and suspects. They work with company leaders, attorneys and law enforcement to obtain restitution and/or prosecute a perpetrator. They also identify warning signs and red flags that indicate evidence of fraud and fraud risk.
The forensic accountant focusses on financial statements and records, while forensic examiners focus on the prevention, detection and deterrence of financial and non-financial fraud.
The former typically possesses an accounting degree and is credentialed as a certified public accountant. The latter has a degree in finance, criminal justice, accounting, law or information services and is credentialed as a certified fraud examiner.
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How We Can Help
IAS can help you identify, deter, investigate and resolve fraud in your company. We can audit your internal controls, create a loss prevention and internal audit program, conduct loss prevention workshops, and most importantly investigate suspected fraud.
Our investigations can obtain signed confessions, restitution and even prosecutions.
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