Behavioral Red Flags for Internal Fraud

Fraud can be uncovered in many different ways: a tip, management review, internal or external audit, document examination, account reconciliation or even by accident. In 65% of cases, however, someone at the company has noticed something amiss and alerted the company. That means there were clues along the way.

It’s easy to miss these clues — or fail to recognize them for what they are — because it’s hard to believe that someone you trust is engaged in a criminal activity. It’s much easier to identify these clues when you consider how an employee was acting.

Certain behaviors are characteristic of people who commit fraud. Some people exhibit more than one behavior. The behavioral red flags that may indicate a cause for concern include the following:

Fraud prevention is the best cure. Adjusting your hiring practices to include background checks may offer some protection against bad actors. Keep in mind that 85% of fraudsters in the ACFE study were never punished or terminated for fraud-related conduct before the crimes in the study.

Call us today if you need help uncovering potential fraudulent practices at your firm.