Fighting back against fraud – HR style

by Cameron Edmond29 Aug 2013

Employee screening and risk advisory organisation RISQ Group has established a free hotline for a limited time to help gather information and prevent fraud in the workplace.

The hotline – which will be active from 8am 2 September to midnight 8 September – comes about as a response to the continuing struggles of organisations against fraudulent activity.

“Every year there’s some great reports that come out that talk about the types of fraud that occur,” Guy Underwood, executive chairman and founder of RISQ Group, said. “But the thing that astounds me is the fraud numbers never seem to get any better.”

Underwood added that most people don’t view fraud and corruption as a problem relevant to them on an individual level, but argues that every false insurance claim and falsified timesheet impacts all employees, and employers need to put stronger mechanisms in place to deter internal fraud.

“A lot of organisations have really strong controls preventing fraud from the outside … but the greatest risk to organisations is from the employees. HR is the gatekeeper, particularly if they are involved in recruitment or resourcing,” he explained.


Key HR takeaways

Underwood outlined a number of steps HR can take to reduce internal fraud in the workplace:

  • A robust screening process. Perhaps the area in fraud protection that HR is most well-versed in, the screening process is a crucial point in weeding out potential fraudsters. Warning signs to look for regarding potential employees includes over-stated qualifications and stretched start/end dates of positions to help cover times of unemployment, failed contracts or imprisonment. Underwood explained that lying on resumes in this way demonstrate dishonesty. While “fudging” resumes is an unfortunately common practice, it is a potential indicator of more serious fraudulent acts in the future.

    Previous managers that refuse to speak about the employee, as well as missing employment records and other documentation also need to be looked out for. “Quite often it is the absence of information that can be very telling,” Underwood said. Organisations that have liquidated or otherwise disappeared are harder to get employment documentation from, and fraudsters will occasionally rely on this – HR should be wary if many now defunct organisations appear on one resume.

    “One of our clients has a policy where the candidate has up to two weeks to supply their screening documentation, so the process can be completed. If they don’t they are stood down,” Underwood stated.

    However, he acknowledged instances such as this can simply be a sign of bad luck, or the nature of a particular industry. As such, a thorough investigation to ensure employees are not being turned down based on loose suspicion is necessary.


  • Clear policies. It is important for HR to establish clear legal policies and contracts outlining the organisation’s stance on fraud, and ensure all potential employees understand and sign off on it. Underwood stated fraud should be placed in the forefront of an employee’s mind during the induction phase.

    “I’m not talking about 20 page documents, it can be as simple as saying ‘This is our definition of fraud, here are examples of fraud, here’s what to do if you suspect fraud’s occurring and here is what will happen to you if you engage in fraud’,” he explained.

    Employees should be reminded of these policies regularly, such as through a message when logging into computers. This will ensure employees remain conscious of the severity of fraud.
  • Zero tolerance. Establishing the policies and reminding staff of them is not enough. Underwood explained many organisations do not handle fraud properly, and simply terminate employees who they have caught, allowing them to walk away (sometimes with entitlements). This fosters a culture that the ramifications for fraud are not severe. Granted, termination is one deterrent, but legal action is much more powerful. Employees must understand serious ramifications will be enforced if they betray the trust of their organisation. In order to achieve this, HR must act appropriately with every case of fraud.
  • Consistency. Underwood also warned against organisations who demonstrate bias to those who have been there longer, and that all policies must be uniformly applied. “There is nothing worse when someone is a new employee, they get caught with their hand in the till, they get taken to the police and charged … whereas someone who has been on the payroll for 15 years is allowed to walk even though they’ve ripped off $50,000.”

    Through their free hotline, which can be dialled at 1800 85 REPORT, RISQ Group will take all reports and contact organisations involved. The organisation also hopes to gain enough information to compile documentation and a report outlining what fraud is taking place, its severity, and what industries are being affected.


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