Employee monitoringSurveillance is widespread amongst workplaces, although employers who monitor employee activity may keep the practice hidden. This could be a mistake, because when employees know they are being watched, they are less inclined to be dishonest. Several surveys, for example, have found that highly visible security cameras deter employees from stealing product. The goal is to reveal enough information without disclosing too much.

Controls and Policies Frequently Employed

A healthy, productive workplace requires honesty and trust. As a result, you must inform employees that you are taking steps to prevent fraud. Conversely, you don’t want to offer so much information about antifraud procedures that thieves can figure out how to circumvent them.

The following are some common antifraud policies and suggestions for communicating them to employees:

Surprise audits. Employees should be informed that trained auditors can conduct audits without notification. However, they should not be able to predict when these audits will take place. Check for any apparent patterns (for example, when specific individuals take time off) that may allow dishonest employees to plan their fraudulent operations.

Internal fraud investigations. If your organization has a specific antifraud group, inform employees about the activities that it monitors and examines. Knowing that skilled and devoted internal fraud investigators operate on-site can deter employees from engaging in illegal activity.

Visible consequences. Many would-be criminals are put off by the prospect of being exposed. As a result, it makes sense to prosecute fraud perpetrators and publish the results of internal investigations. However, do not reveal the names of the criminals or any case details that could help in identifying them.

Important: Before you begin watching or listening in on staff, consult with legal counsel about monitoring or surveillance plans.

Caution Regarding Monitoring Software

Some businesses employ software to track employees, particularly those who work from home. But proceed with caution. You must first notify employees that their activities will be monitored. Consider offering samples of the kind of data your organization can collect, such as a log of systems accessed and websites visited.

Aside from legalities, research shows that organizations that treat their staff as untrustworthy risk alienating them. According to a recent Harvard Business Review article, certain measures, such as software that counts keystrokes or takes photos of employees while they work, might encourage retaliatory conduct, such as theft and sabotage. As a result, choose your fraud-fighting technologies wisely.

Taking On the Fraud Triangle

You’ve probably heard of the “fraud triangle”: pressure, opportunity, and rationalization. It is commonly present when someone commits fraud. Although understanding of antifraud measures may not reduce the temptation to steal, it does interfere with opportunity and rationalization. Employees recognize that there are few opportunities to conduct fraud and get away with it. And if you treat them with respect and freely give facts, they will have a tougher time justifying any illegal conduct. Please contact us for guidance on internal controls and other precautionary measures.

© 2023


Tony LaNasa

Tony LaNasa, CPA/CFE
Director, Fraud & Forensics


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