A report by the Association of Fraud Examiners has identified the dangers of employee fraud to organisations.

The 2010 Report to the Nations on Occupational Fraud and Abuse has said that on average organisations lose 5% of their annual revenues to fraud, and that fraud usually goes undetected for at least one and a half years.

Therefore organisations need to be aware of the warning signs at every level. Frauds committed at an executive level cost three times as much as those at a managerial level, and nine times as much as frauds committed at an employee level.

Employee Fraud Costs Businesses

The report warns to look out for signs such as shrinking inventories with funds being skimmed off before they ever even get into the books.

Stopping this fraud can be as simple as taking an inventory analysis, comparing cash receipts with bank records, or by using more complicated measures such as gross profit analysis. If you need to look into complex fraud on a large organisational level then it is possible to run data analysis using special software.

If the computer data analysis is not employed that it can be as simple as following a paper trail. Cheques should all be checked for forgeries and for cheques made out to unrecognized parties. If any documentation is missing then this should also flag up a warning.

Similarly high levels of overtime, or changes in employee expenses, which are not backed up by the payroll figures should send alarm bells ringing.

If you need help detecting employee fraud, contact our Forensic Accounting Services team on 01454 203 778. We have decades of experience in identifying the fluctuations which could mean that you have become victim of fraud.