Elements Of Employee Fraud
In case of employee fraud, it is normally believed that three elements are present. Because of these elements, people are allowed to commit fraud. Fraud occurs only when all of the three elements are present. Here is a brief discussion about the elements-
1. Opportunity- For committing a fraud, the employee has to believe that he or she is capable of both committing and concealing the offense. But according to some experts, every opportunity of committing fraud is to be exploited. The only concern in this regard is the time & procedure.
2. Pressure/incentive: Bearing down on an individual. In most cases, it is financial. Pressure to display one's wealth without permission or connected to a person's past or current expenditures can arise from addiction of alcohol, drug or gambling. Then there can be emotional pressure in some cases. For example, a cruel boss who is always there to behave badly with the employee. Ultimately, there can be a fear of being fired or losing the job which can lead to employee fraud.
3. Rationalization/Attitude: Most often, there is an "I deserve it" feeling in the mind of the employees. That is the employees feel that they are deprived of what they deserve. Often it is inflated sense of an individual's self-importance as well as contributions and a false entitlement sense. The latter one is very much different. In this form, the employee rationalizes his decision of taking advantage of an opportunity by stating- "I'm borrowing it for sometime and I'll give it back." The "borrowing" can go up to even several thousands of dollars. But the offender continues to rationalize own theft by the "intent" to "pay it all back."
Steps For Reducing Employee fraud
Here are some ideas of reducing employee fraud which you can take as an owner:
1. Employ higher authority for checks with higher amount of money.
2. On receiving a check, keep track of the check by number as well as reconcile bank statements.
3. When employing, have a thorough check on the backgrounds of the employees; particularly those who are going be employed for high posts.
4. Have a check to ensure that no unauthorized person has used a credit card in the name of your company.
5. Consider to purchase bonding insurance. These are insurances against employee fraud.
6. Ensure using a payroll service. By doing so, you will able to reduce the payroll tax fund fraud.
7. Make sure running a journal entry report on a monthly basis.
8. As an own owner, you should visit all the vendors or the corresponding representatives.
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