Until valentines day, love was in the air. soon after, we find that fraud is in the air.

Maybe its time for hr professionals to ask if they have any role to play, in preventing employees from committing fraud. (needless to say, hr professionals should themselves stay out of trouble first.)

While there is audit and vigilance and other mechanisms, i believe that some simple policies framed and implemented well by hr can go a long way in preventing fraud or at least making it difficult. while this is true for organizations of all sizes, i am especially concerned about small and medium businesses which are often dependent on a handful of trusted employees and some outsourced support and any fraud can cost them dearly.

Sincerity is the greatest ploy – don’t fall for it

Think about it. an employee who wishes to commit a fraud needs time, privacy and uninterrupted access to information, lots of personal authority and a reasonable tenure. how does one secure all of this? there is only one way to do it – by winning the hearts of people around, by being least suspected, by being very efficient and ever helpful, by being below the radar, sincere, hardworking and going beyond the call of duty.

The unsuspecting and trusting boss will soon feel blessed to have such an employee and literally and figuratively had over the keys. in other words, the right to commit fraud is hard earned, over a period of time.

Mitigating risk

I am not going to belabor the point about hiring right. of course it is important to hire right but that is no guarantee to preventing fraud. people change, get influenced, fall into bad company and end up doing what they should not be doing.

The ideas and suggestions i present below are neither original nor breakthrough in nature. these are based on what i have witnessed, experienced or heard. these ideas are especially relevant for small businesses which may not have access to expert resources and assistance.

1. All employees who have any financial role to play in any function, be it accounting, procurement or vendor management should go on mandatory leave at least once a year for two weeks. no one should have the authority to waive this and this must be audited. someone else at random must be assigned their work during this period. this is a practice that an international bank i worked for used to follow. only when someone in a sensitive position goes away on leave will the organisation have a fresh pair of eyes to look at the person’s job. employees and their managers who protest this rule or find excuses in implementing it or seek waivers must of course be called to explain their cause.

2. Employees in any role with financial and commercial sensitivities should not be given single occupancy of the premises – in other words they cannot be allowed to work alone. there must be at least two of three people in the premises and if the number comes below, the premises must be closed. being alone is a great setting to commit fraud.

3. Employees handling any kind of financial transactions should never ever have to work overtime or stay back late on a perennial basis. it can lead to errors or fraud. it is better to have more staff and have them leave on time. employees working late perennially should be seen as a potential risk rather than as a sign of sincerity.

4. Having a policy of rotating employees across roles, functions and geographies is most critical. no one in any role with financial implications should be in the same role and location for over a certain period of time. such continuity can be a clear breeding ground for fraud.

5. Diversity is very healthy in all such functions. i must admit that very very very rarely have i come across women commit fraud at the workplace. this is a fact. having a good distribution of men and women might certainly help.

In god we can trust. all others must take leave, go home early, not work alone and rotate jobs and locations regularly