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How Background Verification Can Save Your Company From Employee Fraud

How Background Verification Can Save Your Company From Employee Fraud

Employee fraud is most commonly seen in all kinds of industries. Most of these fraudulent practices are disclosed when conducting an employee background verification check. Embellished resumes have been increased from 30% to 55 % as per the reports collected by the Indian publications. The main reason for fraudulent practices is to bag their dream job and become financially stable. Background verification helps companies verify the details of the candidate by looking at their credentials and identity proofs such as AADHAR, PAN, and Voter ID.

What Is Employee Fraud?

Employee fraud happens when an employee commits fraud against his/ her employer of the organization. The employer may belong to any form of business including partnership, sole proprietorship, organization, and so on.

Common Types Of Employee Fraud

Fraud can manifest itself in many different forms but commonly fall into the below categories.

  • Misuse Of Company Assets

You would be shocked to know that many there is a wide category of misconduct that fall in this category. In a few cases, it’s as simple as a staff member violating the office policies to download movies streaming online, and in other instances involving swiping office supplies such as pens or scissors, renting out company tools and equipment to any third party, selling the company’s damaged goods, carrying out a rival business using company information and material these are some of the examples. These practices can spell disaster for business owners and result in liability.

Running a background verification check before hiring an employee saves you from identifying the thief and you can save your organization from the misuse of the company assets.

  • Bribery And Corruption

Corruption is one of the most common types of employee fraud in the world. Around 2,690 real cases of employee fraud were studied in a span of two decades and in these 38% of them are involved in corruption. Most of these schemes discovered that a single person continuing in the authority and for most of the part this causes a huge drop in employee morale. Some of these cases include kickbacks, bribes, product substitution, and shell company fraud schemes.

You can stop these bribery and corruption cases by conducting an employment background check or criminal record check on the existing employees. These help you identify the real culprits in the organization.

  • Accounting Fraud

Accounting fraud occurs when an employee intentionally manipulates the company accounts intentionally to make the assets appear overstated and liabilities appear understated. The fraudulent corrupted individual makes it seem as if the business is financially strong and doing so covers up his corruption and theft of the company resources. The employees involved in these cases are mostly those who hold key positions in the company or have access to the accounts.

Personal purchases, embezzlement, fake supplier, accounts payable fraud, double-check fraud, and accounts receivable fraud are some of the primary examples.

  • Payroll Fraud

Payroll fraud happens in 27% of businesses and small businesses are at higher risk of payroll fraud where there are usually few controls. Payroll schemes are discovered notably in charitable, religious, or social services and the health care sectors.

The payroll activities include advance fraud, ghost employee schemes, paycheck theft, and timesheet fraud.

  • Data Theft

Despite the advanced technology data thefts are still undergoing in some businesses. This type of fraud is damming the company that relies on the intellectual property of its services or products. Committing data theft will have grave repercussions on the defrauder as it may involve the FBI and may also have chances of 10 years’ minimal imprisonment.

  • Vendor Fraud

Vendor fraud is considered one of the illegal practices in India. The dishonesty vendors embezzle millions in company funds from businesses per year. Some of the common types of vendor fraud include bribery, billing schemes, check tampering, overbilling, price-fixing, bribery, and kickbacks.

How Can Prevent Employee Fraud In Your Organization?

Unfortunately, it takes several months, and even years to spotlight the fraudulent cases. These cases that involve fraudulent practices require an expert's help! TrueBGV is one of the top background verification companies in India that helps many businesses in providing safe hiring. We provide various employment screening services and negate the risk of fraudulent candidates. Contact us today!