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Employee fraud is a serious problem that effects 50% of businesses every year around the globe. Prevention of frauds is much easier than recovering your losses after the fraud has been committed so every organization should take preventive measures to control the risk of employee frauds. Every time a business needs to fill an open work position, there are few steps that need to be taken. The job description needs to be published online, for instance, so that interested parties can submit applications for consideration. The employer then needs to sift through these applications, pick out qualified candidates, and set up interviews. Some employment processes consist of phone interviews followed by in-person interviews. And the interviews usually give the employer the information they need to make an educated hiring decision. In this hiring process one of the core elements is the background check. Businesses needs to run a pre-employment background check before finalizing an applicant. There are many kinds of employee frauds but the most basic categories are asset misappropriation, corruption and financial statement fraud.

"An average organization loses 5% of its annual revenue each year due to employee fraud. - 2014 Report to The Nation on Occupational Fraud and Abuse ..."


Asset misappropriation is an umbrella term used for lots of different kind of insider frauds which includes cheque forgery, cheque tampering etc. These are basically kind of frauds in which an employee exploits or steals resources of an organization. For example, stealing cash after or before it’s been recorded, making a fabricated expense compensation claim or stealing non-cash resources of an organization.


Corruption made up less than one-third of cases and fell in the middle. Corruption takes place when employees use their impact in business transactions for their own advantage while violating their obligation to the employer. For example, extortion, conflict of interest and bribery.


Financial statement frauds include overlooking or deliberately misstating information in the company’s financial reports. This can be in the form of self-made-up revenues, hidden liabilities or inflated assets.


is vibrant to an organization, whether its small or large, to have a scam prevention plan in place. The scam cases studied in the ACFE 2014 Report revealed that the deceitful activities studied lasted an average of 18 months before being noticed. Fortunately, there are ways you can minimize fraud incidences by applying different measures and controls.

- Know your employee

employees can help you recognize possible fraud risk because fraud perpetrators often show communicative traits that can specify the intent to commit fraud so, it’s vital for management to take time to get to know them and to be involved with their employees.

- Setup Reporting system to make employee aware

Make the employees aware that someone within organization is taking care of such frauds so that everyone who is planning to do any kind of frauds should stop or think twice before committing any kind of fraud within an organization.

- Internal control implementation

Internal controls are the programs and plans applied for safety measures of the company’s assets, safeguard the veracity of its accounting records, and prevent and distinguish theft and fraud. Seclusion of duties is an important factor of internal control that can decrease the risk of fraud from taking place.

- Monitor vacation balances

Though it’s a good thing if the employee is not missing a single working day but it’s not true in all cases, it can be a sign of the fear that employee have that if he misses the office, people might get to know about the frauds he is committing within office.

- Hire experts

Organization should hire experts to detect frauds within office environment. Certified fraud experts and certified public accountants who are well trained in financial forensics should plan out a useful antifraud policy structure for an organization.

- Live the corporate culture

There should be clear office structures rules and regulation, policies to prevent frauds.