The COVID pandemic continues to have devastating consequences impacting upon business cash flow, daily stories in the press show a dramatic rise in fraud which the pandemic has brought about.
However, whilst the climate may be ripe for fraudsters to utilise weaknesses, it is also a timely reminder for business owners to be extra vigilant, take stock and ensure that polices and procedures are in place to limit and remove any opportunities for employees to commit internal fraud. No business owner wants to think that their employees would commit such an act, a trusted and loyal employee is worth their weight in gold. However, at Jacksons we have seen a rise in instructions for the recovery of monies misappropriated by employees.
Business owners need to be mindful of how their employees may react to internal pressures, With a shift of resources to remote working, extra checks and internal procedures are often overlooked as not important during this time of uncertainty, with the focus on surviving the pandemic. Be proactive, talk about fraud to your employees and the impact it has on business, identify risks internally, test systems you operate, employees look to the business owners for guidance and what is acceptable behaviour. Ensure that your policies are up to date and that they are more importantly communicated to your employees.
Do not place a reliance that employees are taking care of the day to day running of your business, understand your finances, who has authority to make payments, do not give one person sole authority to make payments, who checks that payments are legitimate. Employees rationalise theft as a temporary loan, or that they have been overlooked for promotion or that they are owed! Common thefts include bogus invoicing, bogus expense claims, data theft amongst other things. These frauds are far from sophisticated, but they continue to go unchecked when an employee is given autonomy. Balance cash and bank account statements on a regular basis, do regular internal audits. Simple measures can go a long way to protect your business, the majority of employees are indeed loyal and diligent and no threat to your business, however, having a fraud policy in place and practices and procedures which are checked and regularly updated will give security to employees that jobs and the business is in safe hands.
Action Fraud estimates that 1 in 5 of small businesses have been defrauded by an employee at some point. More information can be found at here.
If you are concerned about any of the issues covered in this article, contact Leigh Ferguson at lferguson@jacksons-law.com or call 01642 049816.
Leigh Ferguson, Associate Lawyer, Corporate Recovery and Dispute Resolution.
