Managing Human Resources (HR) is certainly not an easy thing and is a challenge for companies. Especially if there is potential fraud or employee fraud that may be lurking in the business. Yes, fraud or employee fraud is one of the crucial problems that business people often face. Where according to a survey conducted by a consulting firm Jack L. Hayes International, 1 in 40 employees were arrested for stealing at their employer’s retail store. The survey also revealed that the possibility of an employee stealing can reach 75 percent greater than outsiders. Of course, as a businessman, you must be vigilant about all possibilities of fraud committed by employees. Don’t let it be just because you are busy thinking about business strategies, you don’t realize that there is fraud from within that harms your business. So, what are some employee frauds that often occur in companies? How to deal with it? Check out the full explanation below.
What is Employee Fraud?
Reporting from Britannica, fraud is a fraud or crime committed to obtain money by falsifying and impersonating. This fraud is usually done on purpose to benefit the perpetrator. Employee fraud cases are generally often found in financial reporting. If not properly supervised, company money can run out without making a profit. Usually this employee fraud can be caused by the absence of a backup system to prevent fraud, a management system that is not yet strong, the absence of procurement of employees who are specifically tasked with monitoring in full without the burden of other responsibilities.
Types of Employee Fraud that Often Occur in Companies
What are the types of fraud or employee fraud that often occur in companies? Here are the five most common types of fraud:
Asset Misappropriation
Fraud against company assets is an illegal act, either related to money or non-cash such as using company facilities for personal interests. For example, using the office laptop is prioritized to work on side jobs rather than the main job.
Corruption
Corruption cases also often occur within companies. Based on the 2019 Indonesian Fraud Survey report, the most common fraud case in Indonesia is corruption, which reached 69.6 percent of the total cases surveyed. In addition, corruption can also take the form of collusion, nepotism, bribery, and gratuities.
Data Theft
This type of fraud is committed by taking important company data containing financial books and operational records for the benefit of the perpetrator. If the theft is done by hacking into a computer, this action is called computer fraud.
Financial Statement Fraud
This fraud is carried out by engineering the presentation of reports to cover up the company’s financial condition that is not in accordance with the provisions of the financial report prioritization scale, as well as falsifying expenditure receipts.
Discipline and Work Ethic Related Fraud
This fraud may seem simple at first glance, but it can have a major impact on company productivity. For example, misuse of work time by time corruption to selling important company information and strategies.
How to Deal with Employee Fraud?
If employee fraud occurs, the company needs to address it immediately to avoid greater losses and cause business failure or bankruptcy. Here are some ways to overcome employee fraud that companies can do:
Tighten SOP Implementation
To avoid employee fraud, companies need to strengthen the implementation of Standard Operating Procedures (SOPs) through rewards and punishments. Try to encourage employees to work according to established quality standards. Then provide punishment to provide a deterrent effect for fraudsters, so that later it can prevent the intention to try to cheat.
Conduct Regular Internal Audits
Internal audits need to be conducted regularly to safeguard the business from possible fraud or financial abuse. Companies can provide training to improve the competence of internal auditors. This is because the auditor team not only prevents fraud but also provides solutions to these problems.
Creating a Good Culture
Improving the culture in the company is a treatment to equalize the company’s vision and mission with employees. Anti-fraud culture can be built by providing counseling and applying strict rules, so that employees can understand their responsibilities and do not dare to commit fraud.
Create an Employment Agreement
In order to avoid employee fraud, companies need to make detailed employee employment agreements. The company has the right to make the contents of the agreement and determine its form, as long as the contents of the agreement do not violate the legal terms of the agreement. With the agreement, the company can reduce the risk of problems in the future between the company and employees. In addition, to prevent fraud, companies can also ask employees to sign a Non-Disclosure Agreement (NDA) or confidentiality agreement.
READ ALSO: Understanding the Rights and Obligations of Probationary Employees in the Company
With the signing of the NDA, employees who leak trade secret information will be subject to a maximum imprisonment of two years and/or a maximum fine of Rp300 million.
KH Contact
Those are some types and ways to overcome employee fraud that you need to know. To clarify the rules agreed between the company and employees, including preventing and overcoming fraud, it would be nice to always be stated in a written agreement in the form of an employment agreement letter. To make it, KH Friend can just leave it to the Legal Contract. We can help you to make an employment agreement letter more easily and quickly, in just 24 hours! The services provided include making company regulations, confidentiality agreements, and warning letters. For more information, please visit KH Services – Employment Contracts page. If you have questions about other company needs, you can also consult for free through Tanya KH or send a direct message (DM) to Instagram @kontrakhukum.
