Since American companies lose billions of dollars annually through employee fraud, employers must try to prevent the losses and be on the lookout when it does occur.
That is the word from Robert D. Allen, an assistant professor of accounting at the University of Utah, who said the amount of annual loss from employee fraud depends on who you ask, but in any event the amount is substantial.Speaking on employee theft during a David Eccles School of Business "business at breakfast" session in Little America Hotel Wednesday, Allen said it is estimated that 30 percent of the country's business failures are caused by white-collar crime.
Allen said the fraud triangle consists of motivation to steal, such as having medical bills or a drug problem; attitude, such as a person feeling like he or she is underpaid; and opportunity, such as a person having access to checks or the petty cash box.
Stealing cash is the biggest reason for a company's loss and that comes through taking money before it is recorded on the books or coming up with a scheme to take money after it is recorded.
Allen said there are several types of schemes by which employees steal from a company, such as creating a fictitious employee and cashing the payroll checks and having a company reimburse the employee double for travel or other expenses.
To prevent employee fraud, Allen suggests a company create an anti-theft culture in the workplace by thorough background checks of potential employees, writing a code of ethics that every employee must read and making certain that dishonesty will be prosecuted.
He suggested surprise audits, surveillance, collecting evidence and examination of public records as ways to catch dishonest employees.