Blog: Identifying the pitfalls of tackling staff fraud

Indie Mann, a manager at accountancy firm Scott-Moncrieff’s Glasgow office, looks into the tricky subject of how to approach the threat of staff fraud and misconduct

It’s important organisations manage the threat of staff fraud and misconduct and approach investigations in the right way.

In today’s increasingly competitive marketplace, many businesses have responded by further empowering staff and undertaking in-house reforms. These changes aim to raise the levels of customer service and enhance customer satisfaction. However, sometimes these changes, combined with the ability to undertake more financial transactions remotely, increase the scope and opportunity for dishonest action by staff.

While the majority of staff within any business are trustworthy and honest, it’s important for organisations to realise the scale of the threat posed by the small proportion of staff who may act dishonestly and defraud their employer and think of ways to approach it.

The way businesses typically approach the issue of staff fraud is changing in response to the increased risk. Historically, many organisations have attempted to play down the threat from within, reluctant to admit to the scale of the problem or the associated financial losses. However, the days where HR would handle most staff fraud cases quietly with no publicity, allowing the dishonest employee either to resign discreetly or be dismissed inconspicuously, are long gone. Indeed, a number of businesses are now adopting best practice by actively sharing data with each other on incidences of staff fraud within their organisations, under carefully controlled conditions.

Accepting that fraud and misconduct can be carried out by your supposedly trusted and loyal staff is never easy. Yet, every organisation, irrespective of size or sector, is likely to have to undertake investigations into staff fraud and/or misconduct at some point (if not already).

When carrying out staff investigations it can often be difficult to demonstrate total impartiality and objectivity, which can play into the hands of trade union representatives and/or legal advisors. The 2015 case of Ramphal v Department for Transport demonstrates the need for impartiality and called into question the scope of HR involvement in such investigations.

Given the complicated nature of many of these investigations (which can range from the misuse of IT systems, download of items contrary to the organisation’s Usage Policy, theft of commercially or personally sensitive data, abuse of travel and subsistence policies or failure to declare conflicts of interest), any delay, unfair treatment or inconsistency in securing sufficient evidence correctly can help those seeking to turn a decision to dismiss into an unfair one. It is therefore essential that any investigations are conducted lawfully, timeously, objectively, and with total impartiality.