All size organizations should be taking steps to assess internal controls. COVID-19 has impacted employee fraud in the workplace.
The economy is going through a tough time right now, many have lost their jobs and are under financial pressure to provide for their families or struggling to financially survive.
If there is opportunity, employees can justify a need for unethical behavior. Or you may hire a new employee who is eager for a position in your organization with the sole intent to defraud you.
The current uptick in employee dishonesty losses does not quantify the additional impact that COVID-19 will bring in the coming years. Consider the following questions to make sure your organization is setting up the right internal controls and taking steps to prevent this type of fraud.
Ask the Following Questions to Help Prevent Internal Fraud:
- “If there is loss, can I place responsibility on one person?” You never want to be in a position where money is missing, and more than one person could have accessed the funds. Or in the instance of dual control; “Is forced dual control implemented?” No one person should be able to access the container alone. Cameras are a good deterrent, but should not be the only deterrent.
- “Is there separation of duties within your processes?’ Does a loan officer have the ability to approve a loan, process the loan and fund the loan?” The answer to this question should be absolutely no.
- “Are audits performed to assure internals controls are adhered to?” or “Are “surprise” audits performed on all cash items?” Unannounced visits from the internal auditor or the supervisory committee to branches prior to opening to physically count all cash can help identify losses and assess current control measures. The employees should not be given time to adjust their cash supply or cash entries.
- “Do you know who you are hiring?” Be sure your background checks are adequate for all employees. Use a competent background check provider to perform background verifications prior to hiring.
A strong internal control system reduces the opportunity to commit fraud, making it harder for employees to steal or engage in dishonest business practices. While there’s no single deterrent to prevent internal fraud, adopting and adhering to security measures will help your credit union to more effectively detect and prevent exposure to these crimes. Education also remains important to inform employees and members of these crimes.
Download our White Paper: Best Practices to Prevent Employee Fraud