insurance fraud investigations

What is Occupational Fraud?

If you are a business owner, chances are you are aware of the severe ramifications of occupational fraud. Occupational fraud, alternatively named workplace fraud, employee fraud or internal fraud, disproportionately affects small businesses across Canada and can result in crippling consequences for business owners. Most commonly described as employee fraud, it occurs when an employee, owner or executive of a company abuses their position for personal gain.

According to the Chartered Professional Accountants of Canada, there are three main forms of occupational fraud to be aware of:

1) Misappropriation of assets. The most common, this type of fraud occurs when someone within the company uses their position to steal from the organization itself. This type of fraud can take form in theft of cash or product, falsifying expense reports or timesheets, cheque forgery and credit card abuse, to name a few.

2) Corruption. The second most common form of occupational fraud, corruption is dishonest and fraudulent conduct by those in positions of power for personal gain. The most common example is bribery, followed by product substitution and collusion.

3) Financial statement fraud. This kind of fraud occurs when an employee falsifies any business record for personal gain, including income statements, cash flow statements and expense reports.

Luckily for you, there are several signs to be wary of that there is a perpetrator of occupational fraud within your company:

1) The employee you suspect is living a lifestyle that does not match their salary.

2) The individual has a suspiciously close relationship with a vendor, a customer or a client.

3) They are not disclosing details of their responsibilities within your company or of their daily activities when prompted.

4) You notice inconsistencies in bank statements, expense reports or cash flow statements, particularly if they are involving the same person.

If you are a small business owner, you are at higher risk of being the victim of occupational fraud. Because your organization is smaller, chances are you have fewer systems in place to detect the occurrence of this type of fraud. Being a sole proprietor or not having clear policies can also put you at a higher risk. If you don’t want to risk losing money, lowered productivity or a damaged reputation due to occupational fraud, it is of vital importance to ensure you have the right checks and balances in place. Conduct random audits and ensure you have the appropriate anti-fraud policies for your business. Avoidance is the best safeguard against severe ramifications.

Let us deal with the issue so that you do not suffer consequences. We provide insight and truth to change the consequences in your favour.