KPMG, a global tax and financial auditing firm, recently released a study that examines the characteristics of workplace participants who commit fraud.
The study, which evaluated 750 cases of fraud, found that 44 percent of cases involved a fraudster who had “unlimited authority” in their organization. In fact, 34 percent of the fraudsters were executives or non-executive directors, and another 32 percent were managers. Only 20 percent were employees.
The resulting losses from fraud tend to be larger when committed by employees who hold senior positions. Their status often allows them to get around control measures and assign tasks to subordinate employees who will cover up their misconduct.
Success also seems to come in numbers. A significant majority (62 percent) worked with others to embezzle, typically with non-employees or former employees. The fraudsters were successful in 61 percent of cases because of inadequate internal regulations.
The study also found employers fall short in detecting financial fraud, with only 22 percent identified through management review. In most cases, the fraud was discovered by accident or through a tip hotline.
Besides occupying a leadership role in an organization, researchers described the typical corporate embezzler as a male, 36 to 55 in age, who exhibits a domineering personality and holds an inflated opinion of himself. Jessica Fino “Fraudsters are male and hold senior roles, KPMG study finds,” economia.icaew.com (Jun. 3, 2016).
So, is a solution to never place older men who have an ego into positions of trust? If you think like that, you will create discrimination risk.
Employers should never profile applicants and employees on the basis of gender, age or any other protected class to avoid fraud.
Instead, employers can reduce the risk of employee fraud, embezzlement and theft by implementing appropriate audits and financial reviews. Such procedures should apply to all financial transactions regardless of gender, race or age.
And ask your insurance agency for an audit of your coverage to make sure you’re protected
Source: The HartfordHelp June 30, 2016