Commentary: Signs that a company has been ripped off.

• Date: 22 October 2007

Byline: Tracy Coenen

How would you know if your company was being looted by a dishonest employee? Most companies miss all of the warning signs that could help stop a fraud early. The Association of Certified Fraud Examiners reports that the average fraud scheme within a company lasts 18 months. That's one year-and-a-half that one or more employees are stealing from the company without being caught. In that period of time, the average internal fraud causes losses of $159,000. Imagine how much damage could be done to your company in that amount of time. There's not much science behind finding fraud. Frauds committed by employees are most often discovered because of a tip from someone else or they are discovered by accident. That doesn't say much for a company's checks and balances. So in reality, companies rely on the observations of employees to help detect fraud. It therefore is important to be aware of some warning signs that the company might be the victim of occupational fraud and abuse. Discrepancies in Accounting Records Companies that keep poor accounting records in general are more susceptible to fraud. Poor recordkeeping systems encourage fraud because employees know that information is not being properly recorded and evidence of fraud may be easy to conceal. Employees are aware of a lack of oversight, and might be tempted to exploit that. Poor...