Employee Fraud – The ‘How-to-Guide’ for the Potential Fraudster

16th May 2017 by Fiona Hotston Moore

Employee fraud remains a significant threat and cost to owner managed businesses with one in four admitting to being a victim of employee theft. The opportunities to the would-be internal fraudster include fraudulent employment references, dishonest expense claims, thefts from the petty cash or bank accounts, bogus supplier accounts, supplier bribes, theft of stock, manipulation of reported accounts to support commissions or bonuses.

So if you’re tempted, here are our tips for the would-be fraudulent employee:

Tip Number one

Don’t do it! Unfortunately employee fraud tends to start in a small way and it is addictive.   Do it once and you will be hooked. You may get away with it today, next week and next month but at some point in the future statistics say you will be discovered. You may get complacent, a discrepancy may be spotted by an astute colleague/auditor or there may be a tip off. At this point a full investigation will take place and it’s likely your employer will engage both lawyers and a forensic accountant.

Tip Number two

Most likely you will be the stereotypically trusted hardworking employee. You will have been employed four to five years and this will be your first step into crime. You may feel it’s your right (a bonus for your efforts) and you may rationalise it in your conscience on the grounds that others do it in your industry or it’s a temporary loan. Perhaps you have an unexpected financial crisis at home. Your boss will be horrified when he starts to suspect you are involved in fraud and he may be hesitant to investigate but when he speaks to the forensic accountants or lawyers we will have to explain that you do, in fact, fit the typical profile of an employee fraudster.

Tip Number three

Don’t assume no one is watching you. A wise business owner will have internal controls and checks on the business.  They will be monitoring the business cash flow, margins etc and they may request the accountant to perform internal audit checks on the payroll, expense claims, purchase ledger, stock records etc.

Tip Number four

Don’t buy a flashy new car, post pictures of your holiday in a 5* resort on Facebook or invite your colleagues to inspect your second home. Your colleagues and boss are not stupid. Internal tip-offs or whistleblowing are the most likely way you will be discovered.  A third of employees claim they would report suspicions about a colleague without hesitation and require no inducement to do so.

Tip number five

Be original. Employee fraud is rarely complex, sophisticated or original. As forensic accountants we know what we are looking for. Unfortunately, of course, if you try to be original and weave a web of deceit perhaps involving others you increase the chance you will trip up yourself.      


Fiona Hotston Moore

Fiona Hotston Moore

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