Holiday parties, shopping for gifts, family get-togethers … this time of the year brings many good tidings.
But unfortunately for businesses, the holidays also typically cause a rise in “occupational fraud,” such as embezzling, theft and misuse of an organization’s resources. The Association for Certified Fraud Examiners’ (ACFE) 2010 report estimates the average organization loses 5 percent of its revenues annually to fraud, with small businesses most at risk.
Fraud occurs when three critical factors intersect: financial pressure, opportunity to commit a fraudulent act, and the rationalization to commit such an act. Since the economic downturn in 2008, many are already under financial pressure; the holiday traditions of travel, celebrations and gifts simply add fuel to an already hot fire.
Organizational safeguards, such as separation of financial duties and keeping valuables locked up, are likely already in place in fiscally responsible companies. What many companies overlook in helping prevent fraud is the most important element: the human factor.
Between now and February, when the holidays bills are hitting hardest, consider putting into practice some of these ways to combat fraud in the workplace.
In addition, if your organization uses an Employee Assistance Program (EAP), remind people that it’s a resource for many problems, including financial and legal issues. Some EAPs also offer classes; you may be able to schedule an on-site speaker on holiday budgeting. EAPs are not only a great way to help employees deal with problems; they can also be a morale-booster.
These are appropriate messages to help prevent fraud at any time of the year, although they are more timely given the stress of holiday spending. As the economy shows sluggish signs of a gradual recovery, no organization can afford the extra drain of fraud, especially when low to no-cost ways of helping prevent it are as simple as communication.