Antifraud training can teach workers how criminals might try to steal your business's assets. But training may not be enough if employees don't have the authority to question supervisors' requests or escalate suspicions to the next level. You don't have to give every employee the ability to reject a payment, freeze an account or accuse a colleague of misconduct. Instead, establish clear procedures so your workers can temporarily pause anomalous transactions, document their concerns and report them for a more thorough investigation.
If you provide antifraud training, congratulations. You've taken an important step toward reducing your organization's fraud risk. But training alone isn't enough. You also need to provide employees with safe, clearly defined processes that enable them to act on their observations and suspicions.
Some businesses discourage employees from questioning transactions because they observe strict hierarchies and chains of command. Other businesses may claim worker "interference" creates unnecessary employee/manager conflicts and work delays. Some of these concerns may be valid, but your business can engage employees in the fight against fraud without causing unnecessary strain on your culture or operations.
Start by defining your antifraud program's purpose, ownership and scope. Then set escalation rules so employees know how to proceed if they suspect misconduct. Next, give them real-life examples of transactions that justify raising a red flag and establish an alternate reporting path when the person in the normal chain of command may be involved.
For instance, let's say a customer returns a purchase and receives a replacement product that's far more valuable than the original item. An employee reviewing pending returns might take the concern to your business's owner or a supervisor who wasn't involved in the original transaction. That person is then responsible for making sure the concern is properly investigated. Once the issue is resolved, the supervisor reports the outcome (observing any privacy concerns) to the employee who reported the transaction.
Here's another example: A vendor submits an invoice that's much higher than the original agreed-upon cost. When an accounting staff member questions the invoice, the vendor produces a revised agreement showing that the higher amount has been approved by an employee in your procurement department. The accounting staff member reports the suspicious transaction to her supervisor, who enlists a forensic accountant. The investigation ultimately uncovers evidence of a kickback scheme involving the vendor and the procurement employee.
Even employees who have the authority to raise suspicions may fear retribution. But if you offer an anonymous fraud tipline or web portal, you can help assure them their reports will be handled confidentially.
Unfortunately, the rumor mill may find ways to circumvent these tools — particularly in small organizations with few employees. So make sure you communicate a no-tolerance policy for whistleblower intimidation and set up a system that will enable you to act on any allegations of retaliation.
By giving employees clear authority and protecting them from retaliation, you can strengthen fraud resistance without impeding legitimate business. When workers know both what to watch for and what to do, they become your first line of defense against theft. Contact us for help with employee training, internal controls and fraud incident investigation.
Get in touch today and find out how we can help you meet your objectives.
