If your business offers staff 'perks', either official or unofficial, you have the potential for your employees to overstep the mark and commit workplace fraud.
What is a perk?A perk is defined as a sanctioned minor benefit outside official remuneration.
Perks are often used to boost employee morale and productivity or make a staff position more attractive.
The problem in many businesses is that the line between what is unofficially sanctioned as a perk, and what is technically illegal, is often so blurred that it is difficult for management to detect fraud.
As much as possible perks should be decided upon by management, and outlined in a letter of appointment or in an employment contract so both parties know what is expected and allowed.
Potential for troubleThe potential for perks to escalate into illegal activities, and for these activities to go undetected, is a very serious issue, and one most businesses often don’t address.
A problem for most businesses is to know where to draw the line, particularly if you have no guidelines in place, or you have activities which are technically illegal - such as padding expense accounts – as accepted practice.
Are you at risk?Your business is vulnerable to workplace fraud if your business:
- offers perks but has no guidelines in place;
- fosters a company culture which is potentially negative, producing suspicion, secrecy, low productivity;
- poor commitment to the organisation and low adherence to correct procedures.
Some of the more serious issues- Fiddles
A serious issue for business is what are known as "fiddles", which are usually committed by a group of people working together.
A "fiddle" involves the systematic and planned stealing of company funds, goods or time which are kept at a low level to avoid detection and are not designed to threaten the employer’s business future.
- Fraud
The biggest threat to your business can come from fraud, which is most often committed by a single employee, sometimes with the help of an accomplice, who has set out to enrich himself through the hidden, unauthorised and systematic misappropriation of company assets.
Fraud can potentially involve considerable sums which, if undetected, can threaten the future of your business.
Examples of fringe benefits, perks, fiddles and fraud.- Fringe benefits could include company car, expenses payments etc
- Perks could include a nicer office; use of work phone and photocopier for personal reasons; being able to leave early on Fridays; being able to work from home on certain days etc.
- Fiddles could include padding expense accounts; stock shrinkage; short-changing customers etc.
- Fraud could include significant stealing of funds, property or services: corruption; fraudulent financial reporting etc.
What can you do to protect your business against fraud?The most important thing is to ensure that systems and controls are in place to monitor work flow and business processes and provide as few opportunities as possible for potential fraudsters to exploit.
These controls can include:
- authorisation procedure for transactions and activities
- properly designed processes, documents and records
- adequate safeguards over access to and use of assets and records supervision and independent checks
Support these fraud prevention activities by fostering an anti-fraud workplace culture whereby the improvements made to systems are actively working to resist fraud at all levels of the business.
Ensure that these procedures are actually followed and are reviewed on a regular basis, preferably by an objective professional who may turn up some holes in your process or identify areas of risk you may not have seen.
Source: Dolman Bateman - who specialise in the detection, investigation and minimisation of fraud in the workplace.