Occupational fraud is a crime typically committed by employees against their employers. Ironically, employees are also more likely to recognize or suspect occupational fraud schemes perpetrated by coworkers or managers. Whether they report through an anonymous tipline or directly to management or HR, rank-and-file employees are generally the first to sound the alarm.
If an employee claims that someone has committed theft or fraud, or just exhibits suspicious conduct, it is your job to take the allegations seriously and investigate them. Here’s how.
Preliminary Digging
If you receive a fraud tip, you must first evaluate its legitimacy through preliminary interviews, even if you intend to delegate the investigation to legal and fraud professionals. To avoid unnecessary legal issues, keep the specifics of any complaint private, particularly the identity of the accused and accuser.
Assure all individuals involved that the investigation will be kept strictly confidential, and inform them that they are not permitted to discuss any aspect of the process with anyone outside of it. Remind managers that all related discussions must take place behind closed doors, that all meeting notes must be securely stored, and that they should only communicate with individuals whose input is necessary for the complaint investigation.
One-on-One Interviews
When meeting with the accuser, the accused, or prospective witnesses, begin with an opening statement that explains the nature of the investigation, followed by open-ended questions that encourage employees to respond with more than “yes” or “no.” Ask the identical questions to all interviewees so you may compare their responses, detect patterns, and expose anomalies. Also, have a witness present to confirm what was said and what happened throughout the interview.
Keep an open mind when obtaining facts. Just because an employee is known around the office as a “troublemaker” or “crank,” does not guarantee that individual is lying or committing an infraction. If an interview appears to wander into dangerous terrain, such as when an accused person claims harassment or asks about legal rights, you should contact your attorney right away.
Consider allowing a third-party investigator, such as a fraud specialist, to conduct subsequent interviews. This can help to maintain neutrality and show all parties that the investigation is being taken seriously.
Tie Up Loose Ends
You should make careful notes during each phase of your investigation. Include dates and hours for workspace searches, computer forensic activity, and discussions. After each interview or action, review your notes to ensure they include all essential information.
Even if the investigation reveals no proof of wrongdoing or criminal activity, you must follow up and close the loop with people involved. When complaints are found to be valid, take appropriate action as soon as possible. You may be able to resolve small concerns with in-house personnel. However, if you suspect a crime or notice financial losses, seek legal and financial counsel, and consider law enforcement, as well.
Document Your Policy
Detail the resolution process in your employee handbook so that employees understand what to expect if they file a complaint of any kind. And make sure that your supervisors understand and follow whatever instructions you have provided in writing. Contact us if you need assistance investigating fraud.
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