What to do when you suspect employee fraud

Suppose you suspect that someone in your company is stealing or involved in fraud:

  • An employee is working unusually or unnecessarily late
  • The person in charge of purchasing is spending too much time with a supplier
  • A member of your sales staff claims to have lost the receipts for a large expenses bill

What should you do?

Innocent until proven guilty

Remember, suspicion is not enough - you need proof before you can act.

Behaviour that looks dishonest often turns out to be perfectly legitimate, so avoid jumping to conclusions or immediately confronting the suspect.

Instead, consult your legal adviser. If necessary, he or she will recommend the forensic accountancy services, in which case contact us for advice on what to do next.

Until you have proof of wrongdoing, exercise caution and carry on as usual. Keep any investigation discreet to avoid alerting the employee to the fact that they are under suspicion. Visit the employees page on a social networking website, it is surprising what personal indescretions individuals are prepared to reveal.

Develop a response strategy

It helps to have a clear policy for responding to cases of fraud or theft. In particular you need to answer the following questions:

  • Will you prosecute and/or take other disciplinary action in all cases, or will you decide on a case-by-case basis?
  • Will you deal with the matter publicly to convey the message that fraud and theft will not be tolerated or will you settle the matter privately to avoid publicity?

The most important thing is to be seen to be fair and even-handed, and of course to be acting within the relevant legal and regulatory frameworks.