The impact of the coronavirus pandemic has been complex and far-reaching. No facet of business, or society, has escaped the effects of COVID-19 and serious questions have been asked of both employers and employees. 

While the issue of fraud – and more specifically employee fraud – has been on the radar for many years, the unique challenges posed by the pandemic have brought the problem under the spotlight in recent months. 

Whether it’s payment fraud, procurement fraud, personnel management, travel or subsistence fraud, exploiting assets and information, or receipt fraud, cases of employee fraud are common. According to Action Fraud, nearly 1 in 5 small businesses have been defrauded by an employee at some point during their trading history, causing significant loss and damage. Unsurprisingly, recent figures from NatWest show that UK businesses have been hit by fraud at a cost of £190 million a year, with 40% being caused by internal employees.

Despite a general perception around the issue, fraud isn’t always the product of malicious intent. Quite often, it materialises from despair, a lack of ability, or even inexperience. With many employees working remotely, and feeling disconnected from the structure and security of the workplace, it’s little wonder the problem of employee fraud has come under the spotlight. 

Times of economic uncertainty or economic boom, as evidenced before and as a result of the 2008 financial crash, often lead to an increase in fraud. Circumstances created by the pandemic – homeworking, job insecurity and financial hardship, and availability of financial support from the Government – all create an environment in which workplace fraud can increase.

Pre-pandemic, the fear of the boss “looking over the shoulder” could be a key factor in limiting employee wrongdoing and minimising the risk of employees falling victim to fraud from third-parties. However, the pandemic has forced employers to rely to a greater extent on its internal policies and procedures, as well a trusting its employees to do the right thing.

 To minimise the risk of fraud by employees, employers should consider:

 To minimise the risk of employees’ actions resulting in fraud by others:

Whilst a determined and sophisticated fraudster will always find a way, most workplace fraud (committed by or against employees) is often opportunistic and possibly due to lapses in oversight, poor management, or simple human or technology error. Taking a risk-based approach to identifying the greatest areas of risk within a business can help an employer effectively review, monitor, and minimise risk and to put in place the appropriate systems and defences to protect against internal fraud.

 If you would like to discuss the topic of employee fraud, contact employment director, Michael McNally, on 07736617394 or email Michael.McNally@pannonecorporate.com

 

 

 

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