What If An Employee is Caught Committing Fraud?

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Businesses have a lot more tools and resources at their disposal than ever before when it comes to managing legitimate business expense claims and reimbursements. It’s easier for them to streamline how expenses are managed, there are mobile tools that simplify things for employees. Also, there are more ways to proactively and quickly detect fraud if it occurs.

However, what if fraud is detected? What are the next steps if an employer believes an employee is committing expense fraud, or something similar? That can be the difficult part, whereas in the past detecting the fraud was the challenge itself.

The following are some things to know as far as trends and also what can be done if an employee is found to be committing fraud.

The Financial Industry

The financial industry has seemed to take a particularly harsh approach when employees are caught committing expense fraud. There have been numerous high-profile instances at companies like Morgan Stanley that have led to firings even for seemingly “small” offenses.

If a broker is found to have committed some sort of fraudulent action according to FINRA, they will usually be cut out of the industry altogether in addition to being fired. The financial industry has some of the toughest standards in terms of committing expense fraud.

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Avoiding the Topic of Fraud

Even if you’re not in an industry where there are outside disciplinary standards and regulations, finding out that an employee is potentially committing some form of expense fraud is tough.

The problem that a lot of employers have is that they don’t confront the employee when they find a problem initially. They may see it as something so small that they’d rather just avoid it. This is a mistake because even small examples of expense fraud can be representative of much larger schemes.

Unchecked fraud can quickly spiral out of control, and it can diminish corporate culture as well.

Confronting the Issue

No matter the situation, it’s important to confront an employee suspected of fraud. There are factors that can guide the conversation and the repercussions, however.

For example, how severe is the situation? Yes, smaller situations need to be addressed, but that doesn’t mean that consequences can’t occur along a continuum of severity. Other factors to consider include the duration the potential fraud has been happening for, the employees’ overall performance level, and the impact that not having the employee might have on the business.

Immediate Termination?

Some employers take a hard-line stance to any form of fraud including faking expense reports, even just a bit. However, before deciding to terminate an employee, it needs to be clear-cut and undeniable that fraud has occurred.

Luckily, there are fewer limitations and things that need to be done beforehand to legally fire an employee suspected of theft or fraud. If you find that major fraud was committed, you may need to go beyond simply firing the employee. It may be an issue for law enforcement, and that’s something you’ll have to talk to your businesses legal counsel about before making any big decisions.


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