Fraud and Embezzlement

How can you stop it from happening to you? – Part II of the Series


This is the second article in a series related to fraud and internal control.

Profile of the Perpetrator

The perpetrator of a fraud is not necessarily a stereotypical criminal.  He can be of any age, race, religion, or socioeconomic background.  In fact, “he” can be a “she” and you may think you know him or her very well!

Does this mean you should be suspicious of all employees?  Certain personnel profiles may be the warning sign you need to detect a scheme!

  • Unhappy employees – Those who are dissatisfied with their work environment and situation may find reasons why they believe they are “owed” something.  How can you keep you employees feeling motivated and appreciated?
  • Stressed-out employees – Those who feel pressure in the workplace to meet certain goals may find less than honest ways to meet those goals.
  • Employees living beyond their means – Those who spend more money than they make must find a source of financing.  Does it make sense that the employee who makes $30,000 per year and whose husband is unemployed is driving a Mercedes and lives in a mansion?   Maybe, but maybe not!
  • Employees who never take vacations – Those who refuse to take vacation may be afraid that someone will discover irregularities in their absence.  Employees in certain positions should be required to take vacations and allow others to perform their duties in their absence.
  • Employees who resist assistance with their job responsibilities – Those who want and have complete control over certain areas may find it easier to carry out a scheme. 
  • Employees with financial struggles – Those who are finding it hard to make ends meet financially have extra incentive to carry out a fraudulent scheme.  Sometimes financial struggles occur because of unforeseen and unfortunate circumstances such as a spouse being laid off or a sudden illness in the family.
  • Employees with addictions – Those with substance abuse problems or gambling addictions need a source to fund their habits.  Sometimes desperate times call for desperate measures.

Does this mean that because an employee may fall into one of these categories that he/she is concocting a fraudulent scheme?  The answer to this is “no.”  However, if management is aware of these warning signs, fraud may be easier to detect.

Look for information on how to help learn when a fraud may be committed in the next edition of the Snyder Cohn newsletter.