Don’t Ignore the Possibility of Employee Fraud

August 21, 2009

Did you know that most cases of employee fraud are not committed by professional criminals—but rather by good, hardworking people who, due to unexpected circumstances, feel they have no other option?

Are you overlooking the risk of employee fraud? A recent study titled “2008 Report to the Nation on Occupational Fraud and Abuse” published by the Association of Certified Fraud Examiners (ACFE) provides evidence that businesses should not ignore this threat.

Report Highlights
Here are some alarming statistics presented in the study[1]:
 U.S. organizations lost an estimated 7 percent of their annual revenues to fraud.
 Average loss was $175,000.
 Median loss suffered by organizations with fewer than 100 employees was $200,000. 
 Small businesses are especially vulnerable due to their inability to proactively detect fraud.
 Lack of adequate internal controls was the most commonly cited factor that allowed fraud to occur.
 Occupational fraudsters were generally first-time offenders.

In an uncertain economy, the threat that employees may steal from employers becomes more and more real.

Prevention – What Can Be Done?
Here are some methods of prevention that can help stop employee fraud:
 Send a strong message from top management that dishonesty of any type will not be tolerated.
 Provide strong internal controls that keep your finances up-to-date and can quickly help identify any fraudulent practices.
 Tighten up hiring practices so only the best candidates make it in your company.
Contact your Federated representative for additional information on ways to help keep your business safe from the growing risk of employee fraud.

 [1]“2008 Report to the Nation on Occupational Fraud and Abuse,” copyright 2008 by the Association of Certified Fraud Examiners, Inc., Austin, TX.

This article provided courtesy of Federated Mutual Insurance Company, your association’s recommended insurer.  This publication is intended to provide general recommendations regarding risk prevention.  It is not intended to include all steps or processes necessary to adequately protect you, your business or your customers. You should always consult your personal attorney and insurance professional for advice unique to you and your business.  ©Copyright 2009 Federated Mutual Insurance Company, All Rights Reserved. 

This information is brought to you by the
PHCC Educational Foundation.
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Visit the Facts & Stats Archive for Links to past articles.

 


 
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