52% of Fraud Cases Exhibit Red Flags Connected to Their Work Duties

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52% of Fraud Cases Exhibit Red Flags Connected to Their Work Duties

There are many ways to uncover occupational frauds. However, uncovering after the fraudulent acts occur causes huge losses for the company, both financially and morally. According to ACFE Report to the Nations 2020, fraud committed by employees accounts for annual losses of 3.6 billion USD.  Thus, it is more beneficial for the company to recognize any red flags from the onset. 

The red flags that companies can spot are in the form of behaviors. The report mentions that in 52% of the studied cases, the fraudster exhibited red flags connected to their work duties. These include unusually close associations with vendor/customer and control issues – unwillingness to share duties – these are the two most common red flags. 

Employers are often advised to implement strong internal controls as a means to prevent fraud from occurring. However, not all internal controls are equally created. Some may be more effective than others to illuminate the behavioral red flags that lead to occupational fraud. The most effective internal control so far is to have a tip line. According to the report, 43% of the frauds are detected by tips. Tips allow employees to report the red flags. As more employees observe the case, the more likely they will report the red flags and the more likely for the fraud to be prevented. Employees can submit tips safely through a whistleblowing system. 

Integrity Indonesia, as a company that has more than seventeen years of work in the field of compliance, has extensive experience in providing whistleblowing services for clients from various business backgrounds. Through the Canary Whistleblowing System, Integrity presents a combination of several reporting channels that are centralized on the website application, thereby increasing our client’s accessibility to reports, while still ensuring the anonymity of the reporter. Contact us for further information about the Canary Whistleblowing System.



Photo by Marten Bjork on Unsplash

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