What is the profile of the typical fraudster?
According to a KPMG study conducted in 2017, the profile of the typical fraudster in a business is:
- Male (66%)
- A threat from within (65% employed by the company)
- Working alone (78%)
- Motivated by personal gain (76%). 12% used the money to fund addictions.
- Carried out between 12 months and 4 years
Additionally, the age of fraudsters is getting younger and women are increasingly adding to the list.
Additionally, there are some things to look out for regarding the profile of a fraudster. They are:
- A risk-taker willing to push limits and take chances
- A ‘know-all’ whose way is better, who takes short cuts and self justifies infractions of laws and rules.
- A ‘hard worker’ who is first to arrive in the morning and last to leave at night, is rarely absent, sick or on leave and is always there for end-of month processing
- Suffering stress from a personal crisis such as financial problems or a bad marriage
- Greedy, with a probably drug and/or gambling problem
- Disgruntled worker who may try to ‘get even’ or get what he/she feels they deserve
- Living beyond the salary and expected income level of the position with frequent overseas trips or new cars
So what can you do to mitigate risk of fraud?
There are some ways you can create a work environment that will reduce the likelihood of fraud:
- Be on the lookout immediately for employees showing some of the traits of the profile of a fraudster and investigate
- Create a culture of awareness by creating internal governance policies and communicating these to your staff
- Lead from the top. Ensure your business has zero tolerance to breaking the rules set out by your own policies and enforce this.
- Where possible, rotate jobs and employees through different roles
- Install approval systems: Ensure the person that pays the bill is not also the person that approves the purchase
- Outsource your accounts to a third party
- Have the accounts audited by an external auditor regularly.
By outsourcing your accounts to a third party provider, you reduce the risk of employees editing the data, paying into their bank accounts and stealing your money. When employees do the wrong thing, you are required to prove and charge them according to the law. Business Service Providers are insured against these events and guarantee the work. Their internal checking systems will identify fraud and report to you as soon as irregularities are found. Xero has an inbuilt assurance dashboard that is able to find out who has changed transactions in an organisation, report the date and detail changed. It also reports who is logging in to your accounts, from where and what they have done in the system.
‘Principles of Internatl Control and Corporate Governance’, Alan Trenerry,