Why Do People Commit Fraud at Work?

Have you ever pinched some stationery from work, or some coffee, because you had run out at home? These frauds are common in the office. What makes an ordinary citizen suddenly become a fraudster?

In the office, certain acts that might seem harmless turn us into fraudsters. Although these are not crimes per se, frauds are taken very seriously by the company. A professor at the Rotterdam School of Management, Muel Kaptein, wondered why “good people” suddenly become fraudsters and do “bad things at work”. According to his research, there are no less than 52 reasons, ranked according to seven factors. Here are some of them.

You don’t feel involved. In other words, your manager ignores your name and you have the feeling that your work doesn’t count.

You only have one goal. If your manager gives you strict orders and you do them without thinking, you may not realize that your behaviour is fraudulent.

You are under time pressure. If you have to think quickly, you risk not taking the time to consider ensuring that everything you do is ethical.

You trivialize “small” thefts. Taking post-it notes or toilet paper is often considered a small theft, and it often tends to be ignored. However, this act can open the door to larger and larger thefts.

You have a poor self-image. According to the professor, employees who have a strong sense of self-identity are less likely to do things that are unethical. Conversely, the others will feel less responsible.

You are constantly suspected and seen as a potential thief. The way in which you are perceived has an impact on your behaviour. If you are believed to be a thief, you will be more likely to steal.

All the other employees behave ethically. You will then be persuaded that if no other employee commits frauds, then no one will notice…

Frauds at work

Close to 5% of annual losses of income for Canadian companies can be attributed to workplace fraud, according to a national survey by the Association of Certified Fraud Examiners (ACFE) conducted among its Canadian members in 2016.

According to the ACFE report, 89.5% of cases of corporate fraud are misappropriations of assets. The second most frequent case is corruption (36.7%). Finally, 12.8% of frauds are related to cases of fraudulent financial statements.

Workplace fraud is committed at all levels of the company: 45.1% by employees, 30.5% by managers and 19.5% by owners or executives. Furthermore, when it is the latter who commit fraud, the median damage is 10 times more than when employees are the perpetrators. In addition, the more people are involved in a fraud, the more risk of greater loss.

Also, according to the Canadian study conducted by the ACFE, close to 30% of fraud cases affect companies with less than 100 employees, undoubtedly because they put fewer means in place to prevent it. For SMEs, the most common frauds are corruption, billing systems, thefts of cash, skimming, fraudulent financial statements and misappropriation of other (non-monetary) assets.

Finally, the report mentions that most cases of fraud are detected through reports from employees, suppliers, customers or anonymous sources.

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